WMREDI keeps a finger on the pulse of the biggest trends, opportunities and challenges facing the West Midlands economy. In June 2023, WMREDI held a series of policy seminars at The Exchange, in Centenary Square, Birmingham, to bring the most up-to-date information and insights to inform policymakers and business leaders’ decision-making.
Our first policy seminar brought together Raj Kandola, Director of External Affairs, Greater Birmingham Chambers of Commerce, and Nicola Headlam, Chief Economist, Red Flag Alert, to discuss the underlying economic data that face businesses in the West Midlands. Raj Kandola summarises the role of the Greater Birmingham Chambers of Commerce Quarterly Business Report in the blog below.
As a business membership organisation that represents over two and half thousand businesses across the region, the Greater Birmingham Chambers of Commerce has acted as the voice of business for two hundred and ten years. Throughout that period, our ethos has remained unwavering – we continue to connect, support and grow local businesses. The Policy Team at the Chamber that I manage plays an essential role in researching key economic trends and sharing granular level data with stakeholders at both regional and national levels and data from our Quarterly Business Report acts as a vital indicator of the performance of the regional business community.
The Quarterly Business Report (QBR) has been running for over thirty years and is the most comprehensive report of its kind in the city region – underpinning our report is data gathered from quarterly surveys on indicators such as sales, exports, investment intentions and the workforce. Our latest data reveals an underlying resilience amongst the local business community despite the challenges they continue to face daily as the fallout from Russia’s invasion of Ukraine along with the disruption caused by the pandemic and Brexit continues to linger. Both domestic and international sales have picked up over the previous three months, cash flow projections have improved ever so slightly and recruitment activity has started to accelerate. It’s also heartening to see that the majority of firms expect their profits and turnover to either stay the same or go up over the next 12 months.
Nevertheless, ingrained challenges remain prevalent. Concerns related to inflation remain amongst some of the highest ever recorded in the 34-year history of the report. Likewise, the percentage of firms under pressure to raise their prices is close to a record high and of those businesses that attempted to hire, over two-thirds faced recruitment difficulties which again reiterates the ingrained labour market challenges firms are attempting to navigate. Within this context, it’s no surprise to see that capex investment has dipped over the last three months as businesses grapple with unprecedented cost pressures.
The Chancellor received many plaudits at the recent Budget for introducing a move towards full expensing in relation to capex investment; however for the measure to be truly effective, it’s a policy that needs to be implemented permanently in order to enable long-term investment at the firm level. Our data reveals that levels of capex investment amongst local firms remain someway short of the levels we saw prior to the global financial crisis and reiterates the wider productivity issues we face as a region. It’s also clear that investing in infrastructure remains a central component in fuelling productivity gains and boosting business confidence. HS2 is perhaps the most pertinent case in point. A recent report, HS2 in the West Midlands, revealed that to date, HS2 has awarded over £1.7bn worth of contracts to West Midlands businesses and more than 8,800 people are currently working on the project in our region.
Despite the challenging fiscal constraints the Government is currently facing, the decision to delay the delivery of the Phase 2 leg from Birmingham to Crewe seems short-sighted, given that any delay is likely to add to costs in the long term. The broader socio-economic benefits that the project has brought our region are clear for all to see and if the Government is serious in its intention to bring the levelling up agenda to life, then backing this once-in-a-lifetime opportunity and delivering it as quickly as possible remains essential.
The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI / WMREDI or the University of Birmingham.