International instability, uncertainty and protectionism continued to impact not just the global economy but the UK economy, with current and future business activity in decline, as a result of reduced confidence in the consumer markets globally. Prices continue to rise nationally, with consumer price inflation CPI rising 3.8% in the year to September 2025.
Global Trends
- The international Monetary Fund notes that whilst global growth projections have been revised upwards, global growth remains on a downwards trajectory. The global economic environment remains volatile, with prolonged uncertainty, greater protectionism and labour supply shocks, contributing to reduced growth.
National Trends
- The Consumer Prices Index (CPI) rose by 3.8% in the 12 months to September 2025, unchanged from August. Core CPI (CPI excluding energy, food, alcohol and tobacco) rose by 3.5% in the 12 months to September 2025, down from 3.6% in the 12 months to August; the CPI goods annual rate rose slightly from 2.8% to 2.9%, while the CPI services annual rate was unchanged in September, at 4.7%.
- Producer input prices rose by 0.8% in the year to September 2025, up from a rise of 0.2% in the year to August 2025. Producer output (factory gate) prices rose by 3.4% in the year to September 2025, up from a rise of 3.1% in the year to August 2025.
- Around 1 in 6 (17%) of trading businesses reported that their turnover had increased in September 2025 compared with the previous calendar month, up 6 percentage points from August 2025. Economic uncertainty remained the most reported challenge affecting turnover for trading businesses in early October 2025 at 28%.
Regional Trends
- Inclusive Growth in the West Midlands: The WMCA has published a report that provides guidance for stakeholders across the WMCA to enable a collective effort in achieving inclusive and sustainable local economic growth.
- Town and Gown: The role of universities in city economies: Research from Centre for Cities have found that Coventry University has helped to regenerate the city of Coventry. In Coventry, the expansion of the its universities has helped young people drive three-quarters if the increase in city centre living over the past two decades. Investment in student housing has also spurred wider private investment.
- Geographically concentrating or spreading public funding?: Research from the University of Birmingham explores whether UK public funding should be geographically concentrated or spread. Findings are that the geographical concentration or spreading of funding each have advantages and disadvantages, as funding allocation approaches, and both can be used to address rationales for policy interventions based on market failures and efficiencies as well as social and spatial equity.
Labour Market
- For the three months ending August 2025, the West Midlands Region employment rate (aged 16 – 64 years) was 73.2%.
- For the three months ending August 2025, the West Midlands Region unemployment rate (aged 16 years and over) was 6.2%, which has increased by 0.5pp since the previous quarter and 1.9pp higher when compared to the previous year.
- For the three months ending August 2025, the West Midlands Region economic inactivity rate (aged 16 – 64 years) was 21.7%, a decrease of 0.7pp from the previous quarter and a decrease of 1.1 pp when compared to the previous year.
UK Business
- The snapshot from March 2025 shows there were 92,565 enterprises in the WMCA area, an increase of 0.7% (+625 enterprises) compared to the March 2024 snapshot, the UK increased by 0.4% in the same period.
- The 2025 snapshot data shows that the WMCA had a higher proportion than the UK in 3 of the 5 turnover bands, the only turnover band with a lower proportion compared to the UK was the £0-£249,999 banding (64.4% vs 65.3%).
- The West Midlands Business Activity Index decreased from 51.1 in August 2025 to 48.1 in September 2025, the first fall in activity since April 2025. The decline was linked to local firms having a lack of work.
- The West Midlands Future Business Activity Index decreased from 74.2 in August 2025 to 71.4 in September 2025, the highest of any region across the UK. Despite some firms being concerned about budgets, subdued client confidence and US tariffs, in general firms remained optimistic due to reports of new product releases and expansion into new markets.
Subnational Foreign Direct Investment
- In 2023, the West Midlands had an outward FDI position of £129.3bn, an annual increase of 17.0% (+£18.8bn) compared to an national decrease of 0.2%. The West Midlands region had the fourth highest outward FDI position across the UK.
Gross Domestic Expenditure on Research and Development
- In 2023, businesses in the West Midlands region spent nearly £5.6bn on R&D – accounting for 7.7% of UK R&D expenditure. Compared to the previous year, R&D expenditure in the West Midlands increased by £744m (+15.4%, UK: +4.3%), the highest percentage increase across the UK and the second highest in real terms (behind London).
WMCA Gross Disposable Household Income
- The WMCA area total GDHI increased from nearly £51.7bn in 2022 to £56.3bn in 2023. This equated to a 9.1% (+£4.7bn) annual increase which was behind the UK growth rate of 9.5%.
- In 2023, GDHI per head in the WMCA area was £18,900. This was an annual increase of 7.9% (+£1,381), the UK increased by 8.4%.
Housing Purchase Affordability
- In the Financial Year Ending (FYE) 2024, the median house price to annual disposable household income affordability ratio was 6.76 in the West Midlands, lower than the average of 7.89 in England.
- In the year ending March 2025, the median house price (existing dwellings) in the West Midlands region was £245,000, lower than the median house price across England at £295,000.
For further details, read the full report.
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.