Business confidence is on the rise across the Highlands and Islands, according to the latest survey commissioned by Scotland’s development agency for the region.

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

Fieldwork was carried out by Ipsos Scotland in June and July 2025. There were 1,007 responses received from enterprises across the Highlands and Islands operating in a range of sectors.

The results show that confidence in Scotland’s economic outlook has increased during the six months leading up to the survey, with 53% of businesses expressing optimism – up from 44% in the previous survey conducted in November and December 2024. This marks a significant shift and suggests growing resilience across the business community.

Just under half of businesses (48%) were actively pursuing growth, while 38% were satisfied with current performance and 12% 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% up from 74% in November/December 2024).

The European Union emerged as the most cited import market (by 64% of international importers). In contrast, the United States (17%) and China (11%) were named by fewer respondents. On the export side, 62% of international exporters identified the EU as a key market, followed by the United States (45%), followed by Australia (14%) and Canada (13%).

With ongoing flux in international trading conditions arising from US import tariff announcements, nearly two in five businesses (37%) viewed international trade as a risk. Understandably tThe concern is more pronounced among international exporters (55%) and importers (50%). Most businesses trading internationally are not planning to change their approach to international trade (41%) or feel it is too soon to say (24%).

Of those who have made, or are planning to, make changes to their approach (19% of international traders), over half (56%) were adopting a cautious approach due to uncertainty. Where they are making changes, this included reviewing supply chains (42%), targeting new export markets (32%) or changing focus to domestic markets (30%).

Businesses identified strong community connections (39%), their understanding of their market (36%) and their workforce (35%) as their biggest strengths.

Most businesses (86%) identified areas for development, prioritising workforce and wellbeing (45%), premises or equipment (39%), and new domestic market opportunities (39%).

However, current economic conditions (80%), the cost of doing business (78%) and both the cost (69%) and availability (66%) 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.

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Twenty-six percent of people see automation and AI as an opportunity, slightly more than the 23% who view it as a risk. The biggest concerns are cybersecurity (64%) and job loss due to automation (49%).

Over half of businesses saw opportunities in tourism (65%), renewable energy (53%), community-led initiatives (52%), and major infrastructure projects (51%), with 71% feeling at least somewhat prepared to take advantage.

“It’s very encouraging to see a rise in business confidence across the region, especially given the economic challenges of recent years,” Martin Johnson, director of strategy and regional economy at HIE said.

“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.”