HIGHLAND businesses are recovering from the pandemic – but almost half say Brexit is holding them back.

Views on Brexit's impact "were more negative than positive", according to a report released today by development agency Highlands and Islands Enterprise (HIE).

That's based on feedback from 1000 firms across the region. They were surveyed in June, five months after the transition period came to an end.

The survey found 57% of companies there are now "operating at pre-pandemic levels or beyond".

But 44% of operators said Brexit had a "negative effect" on their business, with higher costs and delays in accessing the services and goods they need affecting 70% and 65% of companies respectively.

Four in 10 exporters were "experiencing issues" particularly in retaining or re-establishing customer demand.

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Around half had workforce worries, with skills gaps opening up. Decreases in workforce were more common among businesses in tourism (34%) and the creative industries (27%). A lack of suitable accommodation was cited as a problem for filling vacancies, as was the departure of EU workers.

Based on work by pollsters Ipsos Mori, the report states: "Food and drink and creative industries sectors had felt negative impacts more strongly than other sectors. While most were able to access the goods and services they needed, a majority nonetheless faced issues when doing so, mainly higher costs and delays. Among exporters, two in five were currently experiencing issues selling outside of Great Britain.

"Expectations around future sales varied depending on the market, with businesses most positive about sales in domestic markets and in England and Wales, and least positive about sales to EU markets.

"Around half of employers had some concerns about their workforce, with availability of candidates for both permanent and temporary/seasonal roles the key issues. Tourism businesses were particularly concerned about availability of skilled staff and EU workers leaving the business."

Overall, two-thirds of firms expressed confidence in the region's economic outlook for the next 12 months in a 30% jump from the result recorded in October. A total of 93% were confident their outfits would remain viable.

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But there was variation across the area, with businesses in Lochaber, Skye and Wester Ross showing the highest level of confidence (75%) and those in the Outer Hebrides reporting the lowest (45%).

Seven in 10 companies in the Outer Hebrides said they were "not confident in their future viability" and 44% operations here were still running at below pre-pandemic levels.

The research has been running since 2014 and HIE is now working with Scottish Government and the South of Scotland Enterprise agency to extend this to all of rural Scotland.

The National:

Carroll Buxton, interim chief executive of HIE, said: "We already know that the Highlands and Islands region has been disproportionately affected by both the pandemic and the UK’s exit from the EU.

"The early signs of recovery coming across in this survey reflect the high levels of innovation, flexibility and entrepreneurship that many of them have shown during the most trying of times. Their resilience has been tested to the extreme and having weathered that storm will have helped boost confidence in many instances.

"This survey also shows what areas of operation businesses are finding most challenging, for example the issues around imports and exports, skills and accommodation. These are areas that we as the development agency will need to look at with our partners to make sure our resources and support programmes are targeted to best effect."