Rural areas typically experience lower productivity than urban centres – yet they are still capable of significant growth.
According to Sebastian Burnside, Chief Economist at NatWest Group, Pembrokeshire has been the strongest-performing area in Wales for growth over the past 24 years, demonstrating that rural regions can thrive if they leverage their natural assets and emerging sectors.
Burnside explains:
“Even if the levels of productivity in rural areas are on average lower than those in urban areas, it doesn’t mean they are necessarily lower growth places.”
The opportunities lie across various sectors. With the growing global demand for travel and tourism, rural Wales has an opportunity to capitalise on its natural beauty and attractions, boosting both its economy and the wellbeing of its residents.
One of the most significant opportunities for rural Wales comes in the form of the energy transition. With a strong focus on green energy and renewable technologies, rural areas are well-positioned to play a crucial role in the development of sustainable infrastructure.
Burnside highlights the importance of this shift:
“Rural places have a vital role to play in helping us achieve a smooth, stable, and prosperous energy transition. The jobs associated with building and maintaining energy infrastructure are highly sophisticated and in demand.
“Wales has an incredibly strong heritage in industry. When most of the official advisors – for example the UK Climate Change Commission – look at how we expect industrial transitions to take place, they typically envisage a future where we are effectively going to be creating industrial hubs around the energy infrastructure which is going to be needed to provide power for those hubs.
“That could be hydrogen projects, it could be the next generation of steel manufacturing. There is an incredibly small handful of sites around the UK where it’s credible to build a cluster of sufficient scale and sophistication and to operate efficiently on an internationally competitive level.
“Wales is absolutely one of the places with a credible plan to host those clusters. I think that will be a really defining part of the Welsh economy over the coming decades.”
The challenge, however, lies in ensuring that rural Wales has the skilled workforce needed to support this transition.
In order to fully capitalise on these opportunities, rural Wales must address the issue of ‘brain drain’, where younger people leave rural areas to seek employment and educational opportunities elsewhere, often in cities. Burnside acknowledges this challenge: “Population dynamics show that rural areas are ageing faster than cities, and this creates challenges for maintaining services and community life.”
Yet Burnside believes that rural areas can attract people back if the right conditions are in place. One of the most significant factors is the availability of affordable, high-quality housing. As living costs in cities continue to rise, rural areas can offer a more attractive alternative for young families and professionals, provided there is adequate housing and infrastructure to support them.
“Building good quality housing stock for young families is a tried and tested route towards population growth and increased prosperity for rural areas,” Burnside points out.
Connectivity is also a crucial factor in determining the future success of rural economies. Advances in digital technology and the rise of hybrid working offer the potential to level the playing field between urban and rural areas.
Burnside is optimistic about the impact of this shift:
“The adoption of hybrid working means it is more plausible for people to have longer commutes or even sell their skills internationally while living in rural areas.”
However, to ensure that rural communities are not left behind, investment in digital infrastructure is essential. Improved broadband and mobile connectivity will enable businesses in rural Wales to compete on a global scale, attract new industries, and provide residents with greater access to opportunities.
While rural Wales faces challenges in terms of lower productivity and an ageing population, it also holds significant potential for growth. By focusing on key areas such as energy, skills development, housing, and connectivity, rural regions can not only sustain themselves but also contribute to the wider Welsh economy.
