Highland business confidence on the rise after survey shows ‘significant shift’
Business confidence is on the rise across the Highlands and Islands, a new survey has claimed.
Highlands and Islands Enterprise (HIE), Scotland’s development agency for the region, commissioned the survey, which was conducted this summer in partnership with South of Scotland Enterprise (SOSE).
More than 1000 businesses from across a range of sectors responded, with results showing that confidence in Scotland’s economic outlook had increased during the six months leading up to the survey taking place.
Fifty-three per cent of businesses expressing optimism – up from 44 per cent from the previous survey conducted last November and December.
HIE said this marks a “significant shift” and suggests growing resilience across the business community.
“It’s very encouraging to see a rise in business confidence across the region, especially given the economic challenges of recent years,” said Martin Johnson, director of strategy and regional economy at HIE.
“While it is clear that current economic conditions, cost and availability of labour and skills continue to be risk factors for businesses, these latest findings offer valuable insights into how businesses are adapting, investing, and identifying new opportunities.
“We will continue to monitor international trading conditions and how they are impacting on our regional businesses with a view to responding accordingly. The feedback from panel members continues to shape how we and our partners tailor support to meet the region’s evolving needs and unlock future potential.
“We appreciate everyone who took part in the survey. Their contributions have once again offered valuable insights and thoughtful feedback on the challenges and opportunities shaping the region’s business landscape.”
Just under half of businesses that took part in the survey (48 per cent) were actively pursuing growth, while 38 per cent were satisfied with current performance and just 12 per cent were planning to downsize. Arts and entertainment and tourism businesses were more likely to strive for growth, the former having been more likely to have struggled over the past six months.
The proportion of regional businesses importing and exporting remains fairly consistent, although there was a slight increase in those sourcing goods from the rest of the UK (79 per cent, up from 74 per cent in November/December).
The European Union emerged as the most cited import market (by 64 per cent of international importers). In contrast, the United States (17 per cent) and China (11 per cent) were named by fewer respondents. On the export side, 62 per cent of international exporters identified the EU as a key market, followed by the United States (45 per cent), followed by Australia (14 per cent) and Canada (13 per cent).
With ongoing flux in international trading conditions arising from US import tariff announcements, nearly two in five businesses (37 per cent) viewed international trade as a risk. Understandably, the concern is more pronounced among international exporters (55 per cent) and importers (50 per cent). Most businesses trading internationally are not planning to change their approach to international trade (41 per cent) or feel it is too soon to say (24 per cent).
Of those who have made, or are planning to, make changes to their approach (19 per cent of international traders), over half (56 per cent) were adopting a cautious approach due to uncertainty. Where they are making changes, this included reviewing supply chains (42 per cent), targeting new export markets (32 per cent) or changing focus to domestic markets (30 per cent).
Businesses identified strong community connections (39 per cent), their understanding of their market (36 per cent) and their workforce (35 per cent) as their biggest strengths.
Most businesses (86 per cent) identified areas for development, prioritising workforce and wellbeing (45 per cent), premises or equipment (39 per cent), and new domestic market opportunities (39 per cent).
However, current economic conditions (80 per cent), the cost of doing business (78 per cent) and both the cost (69 per cent) and availability (66 per cent) of labour were cited as key constraints to progressing development goals.
Island-based businesses were more likely than average to report that supply chain challenges, access to labour and skills, transport connectivity and availability of housing were barriers to their business development.
Twenty-six percent of people see automation and AI as an opportunity, slightly more than the 23 per cent who view it as a risk. The biggest concerns are cybersecurity (64 per cent) and job loss due to automation (49 per cent).
Over half of businesses saw opportunities in tourism (65 per cent), renewable energy (53 per cent), community-led initiatives (52 per cent), and major infrastructure projects (51 per cent), with 71 per cent feeling at least somewhat prepared to take advantage.
The full Business Panel survey report is available on the research reports section of HIE’s website.