Global Trends
- The OECD found that the global economy in 2025 has been more resilient than expected, supported by better financial conditions, AI-driven investment, and macroeconomic policies.
- The OECD finds significant risks remain including weakening labour markets, potential financial instability (non-bank institutions, crypto volatility), trade barriers, and fiscal pressures that could raise bond yields and tighten financial conditions.
National Trends
- The ONS’s UK economic activity and social change statistical publication has found, 35% of businesses report higher staffing costs over the past 3 months. However, energy prices have dropped sharply year-on-year (electricity -28%, gas -35%).
- However, in ONS’s Business insights and impact on the UK economy, it was found that around 3 in 10 (29%) businesses with 10 or more employees reported experiencing recruitment difficulties in October 2025. Alongside this in late November 2025, 37% of businesses with 10 or more employees that had exported goods in the last 12 months reported they were impacted by US tariffs in the last month.
Regional Trends
- The Greater Birmingham Chambers of Commerce Quarterly Business report highlights steady economic growth despite global uncertainties. Business confidence has improved marginally, driven by stronger domestic sales and investment intentions. Recruitment challenges remain persistent, especially within skilled roles. Inflation and energy costs continue to remain an ongoing concern going forward. Export performance has shown some recovery, but firms are still seeking clarity around support for long-term stability.
- A report from Centre for Cities has found that big cities in the UK have decoupled from national trends. Productivity growth in cities outside of London is outpacing the rest of the country, whilst London is stagnating. However, the outliers to this trend are cities within the Midlands, in particular Birmingham and Nottingham, the only cities to have experienced lower productivity growth than London over this period.
Labour Market
- For the three months ending September 2025, the West Midlands Region employment rate (aged 16 – 64 years) was 73.7%. When compared to the same period in the previous year, the employment rate decreased by 0.2pp.
- For the three months ending September 2025, the West Midlands Region unemployment rate (aged 16 years and over) was 6.0%, 1.5pp higher when compared to the previous year.
- For the three months ending September 2025, the West Midlands Region economic inactivity rate (aged 16 – 64 years) was 21.4%, a decrease of 1.1pp when compared to the previous year.
NatWest UK Regional Growth Tracker
- The West Midlands Business Activity Index increased from 48.1 in September 2025 to 50.5 in October 2025, signalling output growth following a brief decline in September. Where output increases were noted, firms cited better demand for products and services.
- The West Midlands Future Business Activity Index increased from 71.4 in September 2025 to 72.1 in October 2025, the third highest region across the UK. The increase in positive sentiment was due to new product offerings, expansions into new markets and a projected upturn in sales.
Business Births and Deaths
- The number of IDBR business creations in the UK in Q3 2025 was 73,450, a decrease of 3.9% compared to Q3 2024. The number of business creations decreased in 8 out of 16 main industrial groups during this quarter compared with Q3 2024. The most significant fall came from the business administration and support services industry (down 11.9%).
- The number of business closures in the UK in Q3 2025 was 63,205. This is 1.9% lower than in Q3 2024, with 8 out of 16 main industrial groups showing a decrease in closures. The most significant decrease came in the transportation and storage industry (down 15.2%).
- The number of business births in the WMCA area in Q3 2025 was 3,295. This figure was 6.7% (-235) lower than the number of business births in Q3 2024, exceeding the UK decline of 3.9%. Excluding Coventry (+1.4% or +5) and Solihull (+9.1% or +20) all local authorities in the WMCA area decreased compared to the same quarter last year.
- The number of business deaths in the WMCA area in Q3 2025 was 2,815. This figure was 1.1% (+30) higher than the number of business deaths in Q3 2024, while the UK fell by 1.9%. Business deaths decreased in four local authorities in the WMCA area, with increases in Birmingham (+8.9% or +110), Sandwell (+16.4% or +45) and Wolverhampton (+10.9% or +25).
Read the full West Midlands Economic Impact Monitor.
This blog was written by Alice Pugh, Policy and Data Analyst City-REDI / WMREDI, University of Birmingham.
Disclaimer:
The views expressed in this analysis post are those of the author and not necessarily those of City-REDI / WMREDI or the University of Birmingham.