A survey of businesses in the Highlands and Islands has reported that although companies remain optimistic about their own prospects, there has been a decline in confidence in Scotland’s economic outlook since the UK’s EU referendum.

A total of 1,054 businesses located throughout the region took part in the survey carried out by Highlands and Islands Enterprise (HIE) in July and August, exploring business confidence and investment.

A little over two fifths (42%) said their confidence in Scotland’s economic outlook had decreased in the previous six months, compared to 27% in 2015, the last survey before the EU referendum. Twelve per cent said it had increased and 44% remained the same.

While the referendum result had little impact on individual firms’ investment plans, more than half (55%) said it had made them feel less confident in Scotland’s economic outlook.

Conversely 79% of businesses reported that their business performance over the past 12 months was generally stable or improving, up slightly from 76% last year. The proportion of those reporting that their business had struggled meanwhile was down from 24% to 20%.

Almost three in four businesses (73%) were optimistic about their own prospects over the next 12 months. Eighty-five per cent said they anticipate growth (41%) or stability (44%) in the next year or two.

More than half (52%) said they hadn’t used or tried to use any source of investment finance in the past two years, with the main reason being a desire to avoid debt.

Carroll Buxton, HIE’s director of regional development, said: “Clearly uncertainties around the UK’s EU referendum are reflected in confidence levels among businesses in the Highlands and Islands about Scotland’s wider economic outlook. On the other hand, the optimism they express about their own individual business performance and prospects is equally clear.

“The Highlands and Islands economy is well placed to face future challenges. The majority of the region’s commercial sector is made up of small or medium sized enterprises. As we saw during the global financial crisis eight years ago, this diversity, along with the strength in growth sectors provides crucial adaptability and resilience in uncertain times.

“Our focus is very much on promoting these growth sectors and supporting individual businesses in areas such as innovation and exporting. We are continuing our drive towards becoming a world-class digital region by supporting massive improvements in connectivity and helping businesses capitalise on the new opportunities this is creating.”