Highlands and Islands Enterprise (HIE) commissioned the survey in partnership with South of Scotland Enterprise (SOSE).

Fieldwork was carried out by Ipsos in November and December 2024. There were 1,013 responses received from enterprises across the Highlands and Islands region operating in a wide range of sectors.

The results show that most businesses in the region (72%) still performed well or steady (31% and 41%) during the six months leading up to the survey, down slightly from 34% and 44% respectively since the same period the previous year.

The proportion of businesses reporting they had struggled increased from 21% to 28%.

Most (81%) had taken action to improve their working environment. Those actions include making processes more efficient (49%), reviewing supply chains (42%), reducing emissions (37%), and using more technology or automation (35%).

Just under half (47%) were striving for growth, 36% were content with current performance and 14% wanted to downsize. Larger businesses (25+ employees) and social enterprises were more likely to strive for growth.

While confidence in Scotland’s economic outlook had declined from 50% to 44% since the previous survey, this still appears relatively strong.

The biggest challenges facing businesses were economic uncertainty, the cost of doing business, legislation and regulation, and access to skilled labour.

Just under half (47%) of employers said they did not have enough people or skills, with temporary or seasonal roles more challenging to fill than permanent positions.

The main barriers to recruitment were availability of required skills (65%), location of the business (49%), and lack of accommodation (42%).

Most employers (80%) were taking action in relation to their workforce. These include offering training (61%), offering flexible working (44%), making pay and rewards more competitive (42%), and recruiting new people (36%).

In the net zero agenda, almost a third (29%) of businesses had a formal plan for reducing emissions, though many more were taking action without a formal plan.

Finance was considered the most required form of support to help reduce emissions, cited by 60% of respondents. Others were information on the opportunities (44%), access to equipment and technologies (43%), and guidance on what changes to make (42%).

Martin Johnson, HIE’s director strategy and regional economy, said: “We are extremely grateful to all those who have taken part in the survey. Once again, they have provided some extremely useful feedback and detailed insights into the issues and opportunities facing businesses in the region.

“Economic headwinds have become more challenging. Understandably this appears to be affecting business decisions about investment and growth. It’s a real credit to our business community that they have continued to innovate and adapt to continuing economic challenges, even though this has affected confidence and in some cases performance.

“The feedback received through these surveys helps us and our partners to inform decisions on how to tailor our support to best meet the region’s needs and maximise our opportunities.”

The full Business Panel survey report is available on the research and reports section of HIE’s website.