Business confidence 'comparatively strong in Highlands and Islands'
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Business confidence has "taken a hit" but it remains comparatively strong in the Highlands and Islands, according to an enterprise agency chief.
Martin Johnson, director of strategy and regional economy at Highlands and Islands Enterprise (HIE), was speaking after the organisation issued the findings of its latest Business Panel survey.
The extent to which businesses are investing in new technologies and moving towards low-carbon ways of working appears to be greater in the Highlands and Islands than elsewhere in rural Scotland, HIE noted, although the region’s "workforce challenges" are more marked.
“It has been a really tough couple of years for businesses everywhere and, while Covid restrictions have lifted, they’re now facing a whole new set of challenges," Mr Johnson said.
“There’s no surprise that confidence would take a hit in the current economic climate, but it’s still encouraging that it remains comparatively strong in our region.
"It’s also encouraging that businesses in the Highlands and Islands appear to be embracing new technologies and taking more action towards low-carbon ways of working. However, it’s clear that their main focus is still on resilience."
“As we continue our economic recovery, we must fully appreciate the magnitude of challenges facing businesses and tailor support and interventions accordingly. That’s what the Business Panel survey is there for.
"The findings are used to inform support strategies for HIE and our partners, and we are extremely grateful to all those who took part.”
The survey was carried out as part of a wider rural Scotland study in partnership with the Scottish Government and South of Scotland Enterprise.
Interviews were conducted during February and March with 2723 businesses and social enterprises, 1017 of which were in the Highlands and Islands.
The survey tracked business confidence, performance, operating status and optimism. It explored how companies were responding to increased costs, workforce challenges and changing markets, as well as the extent to which they were adopting new technologies and low-carbon ways of working.
It took place in the context of increased inflation, record fuel prices and supply chain problems, compounded by economic sanctions applied in relation to the war in Ukraine.
Despite this, most business in the region continue to show signs of recovery and resilience and 43 per cent are striving for growth.
Economic and business confidence remains stronger than the rest of rural Scotland but has dipped slightly since the previous survey, in October 2021.
The proportion of respondents expressing confidence in the country’s economic outlook over the next year was down from 64 per cent to 60 per cent (50 per cent in the rest of rural Scotland), while those optimistic about their own prospects reduced from 82 per cent to 77 per cent.
Two thirds (67 per cent) reported stable employment levels. More than half (55 per cent) said exporting had remained steady, although 30 per cent reported a decrease compared with 11 per cent reporting an increase.
Almost all respondents (94 per cent) reported concerns about rising costs. This was highest among food and drink and tourism businesses (both 98 per cent) and those operating below pre‐pandemic levels (96 per cent).
The main sources of concern appeared to be the cost of energy (65 per cent concerned) and fuel (62 per cent).
Actions being taken by businesses in response to higher costs include increasing prices (54 per cent), exploring new markets (37 per cent), collaborating (35 per cent) and working with new suppliers (34 per cent).
The move towards more domestic trading appears to have continued, according to the survey, and businesses are responding to supply chain difficulties by using more local or UK suppliers.
Around half of respondents (52 per cent) were exporting outside of Scotland, down from 62 per cent in June/July 2021, with 31 per cent selling outside of the UK, down from 46 per cent during the same period.
Those in the Highlands and Islands appear more likely to be using or planning to use most forms of new technology.
Seventy-three per cent said they were actively moving towards low-carbon ways of working, compared with 64 per cent for the rest of rural Scotland. Steps include investing in premises (40 per cent), making or updating business plans (37 per cent), seeking external advice and support (37 per cent) and investing in low-carbon technology (36 per cent).
There have been 21 Business Panel surveys carried out since HIE first commissioned the study in 2014.
In partnership with the Scottish Government and South of Scotland Enterprise, the study was extended in 2021 to include all rural Scotland.
Fieldwork for the next survey is getting under way this week, with the results expected around the end of August.
