27th June 2026
For many people, interest rates are simply about mortgages or savings accounts. But there is another consequence that receives far less attention – the impact on public investment.
Across the Highlands, local communities are waiting for long-promised improvements to schools, healthcare facilities and transport infrastructure.
In Caithness, these include the proposed Health and Social Care Hubs in Wick and Thurso, the long-awaited Thurso Education Campus, road improvements and other strategic investment projects.
The question is whether these schemes could now face further delays if interest rates remain higher for longer.
Borrowing Has Become Much More Expensive.
Although Highland Council receives capital funding from the Scottish Government, many major projects also rely on borrowing.
That borrowing has become significantly more expensive over the past two years.
A project costing £50 million today may ultimately cost many millions more over its lifetime simply because the interest charged on the borrowing is much higher than it would have been just a few years ago.
Those extra financing costs have to come from somewhere.
Every additional pound spent servicing debt is a pound that cannot be spent on teachers, roads, social care or maintaining other public services.
Difficult Choices Lie Ahead
Highland Council faces a series of difficult decisions
It can:
Continue with projects and absorb the higher borrowing costs.
Delay projects in the hope that interest rates fall.
Reduce the scale of projects.
Or, in some cases, postpone schemes indefinitely.
For projects that are already under construction there is little room for maneuver.
However, projects still at the planning stage are much more vulnerable.
What Does This Mean for Caithness?
For many years, communities across Caithness have been promised significant public investment.
Among the most important projects are:
The proposed Health and Social Care Hub in Wick.
The proposed Health and Social Care Hub in Thurso.
The Thurso Education Campus, intended to modernise educational facilities.
Ongoing improvements to roads and transport infrastructure.
Wider regeneration projects linked to the area's economic transition following the decline of the Dounreay site.
Each of these projects has the potential to improve services, attract families and businesses, and strengthen confidence in the area's future.
However, every year of delay risks increasing costs while reducing confidence.
Delay Can Become a Vicious Circle
There is another danger that receives very little discussion.
Investment attracts people.
It encourages businesses to expand.
It gives young families confidence that an area has a future.
But delayed investment can have the opposite effect.
Young people leave.
Businesses invest elsewhere.
The population falls.
Demand for services reduces.
Eventually, decision-makers begin asking whether the original investment is still justified.
That creates a vicious circle from which rural communities can find it difficult to escape.
The Scottish Government Also Faces Pressure
The challenge does not stop with Highland Council.
The Scottish Government must also manage increasingly tight public finances.
Although capital spending is treated separately from day-to-day budgets, governments across the UK are facing higher borrowing costs than they enjoyed for much of the last decade.
That inevitably means greater scrutiny of every major infrastructure project.
Even where ministers remain committed to investment, delivery may simply take longer.
Promises Must Become Timetables
People in Caithness have heard announcements before.
They have seen consultations.
They have read strategies and long-term plans.
What many now want are firm delivery dates.
If projects such as the Wick and Thurso Health Hubs or the Thurso Education Campus begin slipping by two, three or even five years because of financial pressures, communities deserve an honest explanation.
Looking Ahead
Higher interest rates affect far more than household budgets.
They influence whether schools are built on time, whether hospitals are modernised and whether roads are upgraded.
For Caithness the next few years could prove crucial
If governments can maintain investment despite higher borrowing costs, the region has an opportunity to build for the future.
If projects continue to be delayed, there is a real risk that uncertainty itself becomes one of the biggest barriers to economic growth.
For communities that have waited patiently for years, the hope must be that today's higher interest rates do not become tomorrow's excuse for further delay.