DAVID RICHARDSON: Business confidence survey drops mask wide variations – but here's the clear message from welcoming Highland firms

The Federation of Small Businesses’ Small Business Confidence Index for Scotland reveals a dramatic drop from +14.3 points at the start of this year to -31.8 points for the second quarter.

Businesses feel that the outlook for trading conditions over the next few months is decidedly gloomy, mounting overheads, skills shortages and concerns about the economy are all taking their toll.

To better understand the situation in the Highlands, I spoke to a range of tourism and hospitality businesses. These conversations can never give the same detailed and robust picture as surveys, but they do give a flavour.

Our most recent survey paints a rather gloomy picture for the country as a whole, but conversations that I’ve had with tourism and hospitality businesses indicate the picture varies dramatically. While all are affected by the spectacular increase in costs, and staff shortages are severely biting many, it is clear that consumers have changed too. First, the large number of first-time visitors to the Highlands that we saw in 2020 and ’21, people who would normally have gone to the Mediterranean or music festivals but couldn’t, have disappeared, presumably to return to their old haunts, and second, some parts of the Highlands are much busier than others.

But right now, many businesses in the wildest, remotest, most beautiful parts of the Highlands would greatly appreciate your custom!

For example, many businesses in the Inverness/ Loch Ness area are very busy and enjoying a great season, while, following a slowish start, Badenoch and Strathspey has picked up nicely now too. Here, finding the staff to satisfy demand is frequently the number one priority.

However, the further north and west one goes the quieter, relatively, it appears to get. Indeed, a few FSB members on the north and west coast said that they might have to start reducing staff hours if business doesn’t pick up soon – something unthinkable even a month ago.

So why are remote areas apparently doing worse than everyone anticipated at the start of the year? Part of it might be down to folk making up for lost time and heading abroad, but this doesn’t explain why the Inverness/Loch Ness area is doing well. Presumably the real reason is cost. Add the price of fuel to accommodation and other costs, and the view is that the combination is either discouraging people from travelling to distant parts in the first place or reducing their spending power once they arrive.

But all is not gloom and doom. Coincidence or not, the start of the English school holidays has brought a wave of people north to places like Dingwall and Dornoch, and hopefully this wave is continuing to flow north and west to all parts as I type. Businesses are also welcoming back higher-spending overseas visitors, particularly from Germany, the Netherlands and USA, whether it be on independent holidays, group tours and cruise ships, or things like golfing holidays, and we must build on this for next year.

As things stand, the autumn’s energy price rise will squeeze UK domestic budgets still further, and we must hope that this doesn’t depress demand next year.

But right now, many businesses in the wildest, remotest, most beautiful parts of the Highlands would greatly appreciate your custom!

David Richardson is development manager for the Federation of Small Businesses in the Highlands and Islands.

Do you want to respond to this article? If so, click here to submit your thoughts and they may be published in print.