Rural businesses across Shropshire have seen the amount of cash spent by customers slump by up to 40 per cent amid fears the economic downturn could have a major impact on communities in the county, a new report revealed today.

More than 70 per cent of the businesses are reporting a downturn in spending by customers, according to the report by the Commission for Rural Communities.

They in turn are reducing what they spend as the crisis hits wages and staffing levels, the report said.

It also says businesses, landowners and communities are responding to the downturn in many ways.

These include reducing spending on luxury and new products and services, job juggling and cutting overheads on equipment hire, temporary staff and advertising.

And suppliers are expecting payment on delivery, while larger firms are delaying payments.

More than 60 per cent of companies in the county questioned by chamber of commerce bosses said all aspects of their business were affected by the current economic situation.

Firms in Shropshire have seen a decrease in spending of up to 20 per cent from business customers and up to 40 per cent from regular customers.

The figures are revealed in a report drawn up by the CRC to discover whether the credit crunch is impacting on rural communities.

Shropshire Chamber of Commerce carried out a survey of firms in rural areas on rising costs and the impact of the credit crunch, which was fed into the report.

The report says several sectors including retail, distribution, tourism and agriculture are facing greater challenges. It adds: “Several sectors that are important employers in rural areas are feeling significant effects from the rising costs, declining income and wider credit crunch challenges.”

The report concludes the Government needs to address this situation.

By Rhea Parsons