Alice Pugh, Emily Stubbs, and Gemma Dilkes summarise the key points in this year’s Birmingham Economic Review, produced by City-REDI and the Greater Birmingham Chambers of Commerce.
The review highlights the ongoing recovery of the Greater Birmingham Economy that the city-region has been experiencing, during a period of UK and global political uncertainty. Highlighting both the challenges and opportunities facing the region. Below are some key findings from this year’s Birmingham Economic Review (BER).
Read the Birmingham Economic Review in full
Easing of economic pressures
- National economic growth: the latest forecasts from the Office for Budgetary Responsibility anticipate the UK economy growing by 1.1% in 2024, before increasing to 2.0% and 1.8% in 2025 and 2026.
- Growth in the city-region: Greater Birmingham contributed an estimated £60.78bn in gross value added (GVA) to the national economy in 2022, accounting for 2.7% of the UK’s total GVA. The city-region’s GVA appears to have grown by 9.7% since 2021.
- Export growth: the value of goods exports from the West Midlands in Q2 2024 was £8.8bn, 1.4% higher than one year ago in Q2 2023 and 16% higher than pre-pandemic levels.
- A sense of business confidence: in Q3 2024, 65% of businesses anticipated an increase in their turnover in the following 12 months and 57% expected an increase in profitability over the next year.
- Interest rates are beginning to decrease: In August 2024, the Bank of England cut interest rates for the first time since 2020. However, rates remain high at 5.0% and are expected to remain high for a prolonged period.
Population: A Young and Diverse City
- Young and diverse: 22.1% of Birmingham residents are 0-15 years old (compared to 18.5% across England), and 51.4% identify as Black, Asian, and/or Minority Ethnic.
- Skills attainment remains below average: 6.5% of working-age people in Greater Birmingham have no formal qualifications compared to 6.2% across England. The city-region also has a shortfall of residents with RQF 4+ qualifications – 43.2% compared to 46.7% nationally, although the region has been closing skills attainment gaps with the national outlook.
- Economic inactivity has declined but remains high: following a peak in local economic inactivity in 2021, as of 2023 this has since declined to 23.7%, although it remains higher than pre-pandemic levels, contributing to tight labour markets.
- Increasing earnings: between 2022 and 2023, total median weekly earnings in Greater Birmingham rose considerably by 9.2% from £498 to £544, which is greater than the UK rise of 8.0% from £524 to £566.
- High levels of child poverty: as of 2023, over a third of children in Greater Birmingham are in relative poverty and a quarter are in absolute poverty.
Unleashing the potential of Greater Birmingham
- High Speed 2: construction of HS2 is well underway, and new funding has been allocated for tunnelling between Old Oak Common and London Euston to help connect Birmingham Curzon Street to central London.
- Devolution: the West Midlands Combined Authority (WMCA) has secured a departmental style ‘single settlement’, giving local leaders unparalleled control over spending on devolved areas including adult skills.
- Industrial Strategy: the government has launched its industrial strategy green paper, setting out key sectors of focus, which the government feels can bring about the most robust growth. It is anticipated that mayors of devolved authorities will be given new powers to grow sectoral clusters.
- Maximising foreign direct investment: in the year 2023-2024, the West Midlands and the South East had the joint highest number of Foreign Direct Investment (FDI) projects outside of London (133 projects). 7,581 new jobs were created as a result of FDI in the West Midlands in this period – the highest of any UK region outside of London.
Read the Birmingham Economic Review in full
This blog was written by Alice Pugh, 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.