The Birmingham Economic Review is out now!
This year’s report will provide a comprehensive analysis of the city’s economy amid the wider geopolitical landscape, and actionable measures that businesses and stakeholders from across the city-region can take to drive economic growth.
Read the full Birmingham Economic Review 2025.
Johannes Read argues that Birmingham’s economy, like an onion, develops in layers shaped by history, and explains how understanding this evolution can guide future cluster development, innovation policy, and growth opportunities across the West Midlands.
Economies, onions, ogres and layers
“Ogres are like onions. They both have layers” quipped a frustrated Shrek to Donkey in the 2001 animated film. If the short-tempered Shrek had enough patience as the duo trudged through Far Far Away, he could also have explained to the talkative Donkey that economies have layers too.
The economic geography that you see today is steeped in history. This is true not only in Birmingham and the West Midlands, but in every place across the world. Places and economies do not emerge from a vacuum but are layered upon each other over time. In academic circles, this is understood as evolutionary economic geography.
In Birmingham, the canals and former trading centres round Brindleyplace and the Mailbox were redeveloped over the late 1990s and early 2000s to become the place to be for new food outlets, trendy bars and leisure. More recently, the redevelopments in Digbeth have used the former industrial units at the Custard Factory and beyond to be a centre of arts and creative industries. The BBC’s move to the Tea Factory in Digbeth capitalises on this growing creativity, as well as Birmingham’s relative proximity to other large cities in Manchester, Liverpool Bristol, Cardiff, Nottingham and the forthcoming HS2 line from London.
Harnessing and building on these existing assets in the city can support future layers of economic development. Unlike in Shrek, there is not one solution to find a “happily ever after”. Still, the importance of layering is that decisions made now will have a legacy into the future. And, understanding this, helps understand what type of city and economy we would like to build into the future.
Places change over time
In just five short years, the economic landscape of Birmingham has shifted significantly after the covid pandemic, Brexit and changes in national and devolved governments. Understanding how places and economies change over time helps bring to life the policies and priority clusters outlined by the West Midlands Futures report and West Midlands Combined Authority Cluster Growth Profiles. These policies can in turn can help achieve the economic vision outlined in the West Midlands Growth Plan.
The West Midlands Futures work outlines an important distinction between emerging and future opportunities.
Emerging opportunities are defined as: “Industrial activities that already exist in the West Midlands (and are perhaps growing), with pockets of companies already supplying into small scale opportunities, but with the potential to grow substantially.”
And future opportunities focus on “Industrial activities that generally don’t exist as material activity in the region (or in very small pockets), but with companies in the region that have the capacity and capability to supply into growing opportunities with increasing demand in future years.”
With that in mind, West Midlands Futures report identifies 22 sectoral opportunities for the West Midlands, outlined in the table below.
Table 1
Source: Mulla, I, Dwight, D, Gasienica-Fronek, L, Forde , E, Kitagawa, F, Bramley, G, Ma, H, Jin, D, Blake-Carr, R, Lyons, M & Arriaga Garcia, GJ 2025, Exploring Emerging and Future Opportunities in the West Midlands Combined Authority Region. West Midlands Combined Authority.
| Opportunity area | Sector(s) | Characteristics |
|
Emerging |
Future Logistics, Textiles & Fashion, and eCommerce | Well-established, high employment, turnover and business presence in the region. |
| FinTech, Defence, and AdTech | Strong GVA per employee. | |
| Pyrolysis and Hydrogen | Strong productivity within clean growth
Sectors. |
|
| Engineering Biology, Space Technology, and Robotics | High innovation intensity. | |
| Digital & Advanced Technologies, including Space, Geospatial Technologies, and Defence | Large investment flows. | |
|
Future |
Battery Supply Chain, FinTech, Cyber Security, and Immersive Technologies | Low employment and business density but benefit from growing investment and innovation funding |
| FoodTech and Rehabilitation | Labour-intensive with lower productivity,
indicating the need for transformation through automation or upskilling |
These areas broadly align with the WMCA cluster growth profiles outlined below:
Table 2
| Cluster | Growth opportunity |
| Manufacturing of electrical light vehicles and associated battery storage devices | A further £850m – £950m of output and 11,200 to 12,400 jobs by matching the growth trajectory of the leading UK region for similar clusters. |
| Health-tech and med-tech | A further £400m to £430m of output and 5,300 to 5,900 jobs by matching the growth trajectory of the leading UK region for similar clusters. |
| Aerospace (including manufacturing alternative fuels) | A further £80m – £90m of output and 900 – 1,000 jobs by 2030 by beating the average growth profile for UK for similar clusters. |
| Logistics and distribution | A further £280m – £290m of output and 5,500 to 6,000 jobs by accelerating the already high growth prospects by additional 1% per annum. |
| Professional and financial services and supply chain | A further £580m to £630m output and 8,500 to 9,400 jobs by matching the growth trajectory of the leading UK region for similar clusters. |
| Creative content production and gaming | A further £55m to £65m of output and 1,100 to 1,500 jobs by matching the growth trajectory of the leading UK region for similar clusters. |
| Manufacturing of future housing | A further £320m to £220m of output and 3,400 to 3,700 jobs by beating the average growth profile for UK for similar clusters. |
The next steps are to support these emerging and future opportunities through public policy, business support ecosystems and skills development.
Fertilising the ground for cluster development
There are three broad opportunities for supporting these emerging and future sectors. These are enabling supportive public policy, connecting publicly funded and privately funded research and development, and working in partnership to support the wider innovation ecosystem. This helps fertilise the ground for cluster development.
There are a number of spatial plans and strategic documents to support the development of priority clusters. In terms of planning, Birmingham City Council’s Our Future City plan focuses on Birmingham city centre, where the overarching Birmingham Development Plan sets out the broader framework for spatial regeneration.
The WMCA Growth Plan outlines high growth clusters and innovation as its first of six components of its growth plan. There is a strength in that the current plan, developed under after a change in leadership from Andy Street to Richard Parker, builds on work done from the previous leadership. This continued focus by supporting economic clusters identified in the West Midlands Plan for Growth, developed in December 2022, shows a commitment and certainty to these sectors in the updated Growth Plan, published in August 2025.
Further, is the UK Government’s Industrial Strategy green paper which again outlines similar priorities in advanced manufacturing, smart energy, health technology, digital, and professional services.
Opportunities for future growth
The next step is to take these strategies and turn them into actionable results that do support the emerging and future clusters of the region. Whilst the West Midlands performs better in terms of private R&D than outside of London and the Greater South East (~£650 per capita), this contrasts with public R&D spending in the West Midlands being only higher than Wales and Northern Ireland (~£120 per capita). There is a strong private business base, but a less strong public sector R&D space.
One opportunity underway to better connect public and private R&D is through the West Midlands Combined Authority Areas of Research Interest. WMCA ARIs bring together overlapping research needs in interdisciplinary areas to:
- Promote inclusive economic growth in every corner of the region
- Ensure everyone has the opportunity to benefit
- Connect our communities by delivering transport and unlocking housing and regeneration schemes
- Reduce carbon emissions to net zero and enhance the environment
- Secure new powers and resources from central government
- Develop our organisation and our role as a good regional partner
The ARIs set the scene for connecting the public research with the broad ranging, interdisciplinary questions, which come together under the growing powers of WMCA’s devolution deal.
There is the opportunity to building on our understanding of how places change over time. By understanding this, and using evidence to identify emerging priority clusters, and better connecting interdisciplinary impacts together, there is an opportunity to support the wider inclusive economic development for Birmingham and the West Midlands region.
This blog was written by Hannes Read, Policy and Data Analyst, City-REDI, University of Birmingham.
Disclaimer:
The views expressed in this analysis post are those of the author and not necessarily those of City-REDI or the University of Birmingham.