A new European Investment Bank (EIB) Investment Survey snapshot for Cyprus shows a business sector that is unusually investment-active and confident in its own prospects, even as firms grow more cautious about the wider economic and regulatory climate. The survey, based on interviews with 130 Cyprus-based firms conducted between April and July 2025, also highlights a rapid uptake of generative AI in specific use cases, strong international trade exposure, and a long list of structural barriers — from skills shortages to transport and digital infrastructure gaps.

The headline figure is the share of firms investing: 94% in Cyprus in 2025, up from 84% a year earlier and above the EU average of 86%. At the same time, the net balance of firms expecting to increase investment in the current financial year rose to 10% (from 3% in 2024), again outperforming the EU average of 4%.

But optimism is not uniform. The services sector stands out as an outlier, expecting investment to fall rather than rise (a negative net balance of -8%), while manufacturing, construction and infrastructure firms report a positive net balance of 20%. The survey also suggests that Cyprus’ investment is more focused on maintaining existing capacity than expanding it: 54% of last year’s investment went to replacing assets, while capacity expansion accounted for 13%, roughly half the EU share (26%).

Asked what constrains investment, firms in Cyprus point first to the availability of skilled staff (89%), a concern that has remained persistently high. Energy costs (87%) and uncertainty about the future (84%) follow closely, alongside labour regulations (82%) and business regulations (78%).

Cyprus diverges sharply from the EU when it comes to infrastructure and finance constraints. Adequate transport infrastructure is cited by 75% of firms (EU: 45%), access to digital infrastructure by 70% (EU: 44%), and availability of finance by 70% (EU: 45%).

Despite concerns over access to finance, measured finance constraints remain relatively low. The share of finance-constrained firms stands at 6.8% in 2025, close to the EU average (6.1%) and sharply down from 16.7% in 2024 — the lowest level recorded for Cyprus since 2019 in the survey series.

When external finance is used, banks remain overwhelmingly dominant. 94% of Cypriot firms that received external funding obtained it from a bank. Policy support is broadly in line with the EU average (17% vs 16%), but Cyprus firms report much lower use of grants or subsidies (2%), compared with 7% in the EU.

One area where Cyprus clearly outperforms the EU is women’s representation in business leadership. Forty-two percent of firms report that women hold at least 40% of senior roles, compared with 25% in the EU, while 22% say that at least half of owners are women, versus 13% across the EU.

Cyprus appears more globally integrated than the EU average. 81% of firms report that they import or export, compared with 66% across the EU, rising to 95% in the services sector. However, this openness comes with concerns: among internationally trading Cypriot firms, 64% cite recent changes in customs and tariffs as a challenge, compared with 48% in the EU. Compliance with new regulations is also a major issue (59%).

More positively, supply-chain stress is easing rapidly. Only 20% of firms now report problems accessing commodities and raw materials, down sharply from 41% in last year’s survey. Some firms have responded by increasing inventories, with 24% reporting higher stocks since the beginning of 2024, above the EU average (17%).

One of the clearest indicators of future-oriented investment is generative AI. The survey finds that 23% of Cypriot firms systematically use tools such as ChatGPT, Bard or Copilot to improve processes, below the EU average of 37%.

Among firms that do use AI, Cyprus shows a distinctive pattern. AI is most commonly deployed for internal processes (75%), and more intensively than the EU average for product development (41%) and customer service (39%). By contrast, usage remains very limited in human resources (4%), and lower than the EU average in marketing and sales (30%).

At the same time, the survey highlights a broader digital technology gap. Only 58% of Cypriot firms use at least one advanced digital technology, compared with 77% in the EU, while just 32% use multiple technologies, versus 51% across the EU.

On climate exposure, Cypriot firms report feeling less physically threatened than the EU average. 60% perceive physical risks from climate change, compared with 68% in the EU. However, preparedness indicators are notably weaker.

Only 10% of firms report having developed a strategy to adapt to physical climate risks, while 44% have conducted an energy audit in the past three years, compared with 56% in the EU. Even more striking, just 20% of firms set and monitor targets for their own greenhouse gas emissions, less than half the EU rate (47%).

When it comes to adapting to stricter climate standards and regulation, Cyprus also appears comparatively relaxed. 52% of firms believe they will be largely unaffected, versus 37% in the EU. Yet only 69% report taking any action to reduce emissions, well below the EU average of 92%, with the most common measures related to waste minimisation and recycling.