Perth and Kinross has been named the UK’s hottest region for business growth potential for the second year running, according to the latest study from data analytics platform Growth Flag, with more local firms expected to grow by 20% or more this year than the UK average.

Analysing more than four million businesses across the UK, Growth Flag’s Growth Outlook 26 said that over 11% of Perth businesses are likely to post growth of around a fifth over 2026, compared to just 9% of companies across the UK.

Praising Perth for its strong tourism, energy, and food and drink industries, the report said the “gateway to the Highlands” benefits from a vibrant mix of small and independent businesses working alongside heavyweight employers like SSE, Aviva and Highland Spring.

Claiming the top spot, Perth and Kinross was ranked ahead of Southwark for its growth potential, despite the London borough’s close links to the heart of the UK’s financial and professional services sectors, which also saw it outpacing the national average.

“This is the second year in a row Perth and Kinross has been recognised as the best place in the UK for business growth potential,” said Eric Drysdale, leader of Perth and Kinross Council.

“This tremendous success is a result of the hard work, resilience and innovation of our business community, and the underlying strength and diversity of our local economy.”

Perth and Kinross wasn’t the only Scottish winner in Growth Flag’s analysis, however, with another two northern regions rounding out the top ten.

Aberdeen, in sixth place, saw its businesses record growth potential matching Perth’s (11%), with the report identifying more than 1,200 high-performing firms, especially across energy transition and cleantech, as private sector initiatives and large-scale investments allow local firms to quickly scale.

Coming in ninth place, Moray in Scotland’s north east exhibited particularly strong potential, with 12% of businesses in the region showing a promising growth trajectory, particularly across the food and drink, manufacturing, and tourism sectors. 

While home to around just 95,000 people, the study found that Moray’s coastal towns and rural landscapes were proving attractive sites for high-growth companies in innovative industries, with space-based firm Orbex being a prominent example.

However, despite a strong showing, the report cautioned that Scotland, along with the rest of the UK, has seen a significant decline in the number of new businesses starting out, with the number of business registrations falling by 6% over the country.

Recommended reading

• Scottish Budget Hits Jets and Mansions, But Snubs Tech
• Are Policy Delays Risking Scotland’s Business Competitiveness?
• Scotland’s Fintech Cluster Doubles in Five Years

Added to that, more than 726,000 British businesses are showing early distress signals, a 14% year-on-year increase, with more than 55,000 in critical financial distress, a staggering 78% spike.

Growth Flag found that the number of UK firms projected to achieve at least 20% growth in the coming year has dropped by 16%, with all businesses, including those which are growing, facing a web of economic pressures and policy challenges leading to skills gaps, rising costs, and roadblocks to digital transformation.

“While 2025 has provided new direction for supporting business growth, strategies and plans now need to move fully into action,” the report concludes. “In a continued challenging context, identifying growth potential and sharing strong practice will be key to boosting business growth and the positive impacts it can bring to local places.”