Inverness and the Highlands are expected to face economic difficulties in 2026, with low growth and retail closures impacting local businesses.
By Tony Mackay
Inverness and the wider Highlands are set to face many economic challenges in 2026. While there are some positive signs, the outlook is mostly negative.
Last year saw very little economic growth, and the forecasts for 2026 are similar. The latest estimates for the UK economy show an annual growth of just 1.4 percent in 2025, with an even lower average forecast of 1.1 percent for 2026.
The Scottish economy is expected to follow a similar trend, remaining below the historical average of about 2.5 percent per year. Unfortunately, it seems unlikely that Inverness and the Highlands will perform better in 2026.
Recent income growth has been minimal, leading to reduced spending in local shops. This is evident from the empty storefronts on the High Street in Inverness, a situation mirrored in many other local towns.
Recent retail closures include the View Café in Aviemore, and Bank of Scotland has announced the closure of four branches in the Highlands. More closures are anticipated in 2026.
Highland Council and other public bodies are being cautious with their spending, especially on construction projects. Tourism remains vital for the Highland economy, and the impact of the Inverness Castle development on visitor numbers will be noteworthy.
On a positive note, construction has begun on a new hotel on Church Street, and plans are underway for another hotel in the former infirmary building next to the River Ness.
Progress with the Green Freeport has been slow, but recent investments have been announced for Invergordon and Ardersier. The Freeport could significantly impact the economy in the long run, but not in 2026.
The manufacturing sector is experiencing mixed results. The whisky industry has seen good news, while fish processing is struggling. Last year was particularly tough for the Highland fishing industry, with significant drops in fish landings in Scrabster and Kinlochbervie, although Ullapool had a strong year.
The local construction industry is facing challenges, especially in housebuilding. Additionally, the local population continues to decline, with more deaths than births. The population is aging, and there has been little recent inward migration.
While I am optimistic about our long-term prospects, I expect 2026 to be a quiet year for the local economy, with growth of only about one percent.
Tony Mackay is an Inverness-based economist.
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| Year | UK Growth Rate | Scottish Growth Rate | Local Issues |
|---|---|---|---|
| 2025 | 1.4% | Below 2.5% | Minimal income growth, retail closures |
| 2026 | 1.1% | Similar to 2025 | Expected further closures, cautious spending |
