Birmingham continues to be a compelling investment destination despite a string of pressures facing businesses, according to new economic report released today.
The annual Birmingham Economic Review paints a largely optimistic picture for the city which it says is due to an improving economy, a resilient export market and the promise of further devolved powers.
But the review, produced by the City-REDI economic institute at University of Birmingham and Greater Birmingham Chambers of Commerce, also warns of ongoing skills shortages, alarming child poverty rates and cost pressures arising from the Budget.
The 2024 report suggests the Birmingham city-region has increased its gross value added contribution by 9.7 per cent to £60.78 billion.
The value of goods exported from the West Midlands in the second quarter of 2024 was £8.8 billion - 1.4 per cent higher than a year ago and 16 per cent above pre-pandemic levels.
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And, prior to the Budget, businesses were upbeat, with 65 per cent saying they expected turnover to rise next year while 57 per cent were predicting a profitability boost.
The report says the arrival of HS2, more devolved powers through the West Midlands Combined Authority's devolution deal and a Budget windfall of £1.5 billion to drive economic growth should put the city-region on an upward trajectory.
However, skills shortages persist, with a higher percentage (6.5 per cent) of working-age individuals lacking formal qualifications compared to the national average (6.2 per cent).
Chamber chief executive Henrietta Brealey said: "Prior to the Autumn Budget, the Greater Birmingham business community seemed to have been feeling a cautious optimism that the economy might be starting to recover from the disruptions of Brexit and the Covid-19 pandemic and the subsequent energy and cost-of-living crisis.
"Inflation has softened, interest rates are gradually declining and º£½ÇÊÓƵ business investment has returned to pre-pandemic levels. Post-Budget, and at the time of writing, we have yet to see whether that is still the case.
"The significant increases in the tax burdens of many businesses may well put a damper on business confidence.
"Whether that can be offset by meaningful action on pledges on the importance of boosting infrastructure spend, tackling skills gaps, driving innovation and continuing to turn the dial on regional devolution, remains to be seen.
"Greater Birmingham is a place of many strengths that also has plenty more scope to grow to reach its full potential.
"Driving inclusive growth, addressing barriers to economic activity and working together to tackle health disparities and high levels of deprivation, will continue to be at the heart of this."
Professor Rebecca Riley, deputy pro vice-chancellor at City-REDI, added: "The º£½ÇÊÓƵ economy is in the process of adjustment and recovery from successive shocks in recent years.
"The pandemic, Brexit, the invasion of Ukraine, the cost-of-living crisis, higher interest rates and the depreciation of the pound, have all caused significant structural changes to the º£½ÇÊÓƵ economy, in the short, medium and long term.
"The º£½ÇÊÓƵ economy is currently trying to adapt to and navigate these changes in its recovery.
"The West Midlands was acutely impacted by a number of these shocks, particularly Brexit and the energy crisis, due to the sectoral mix within the region.
"Moving forward, sustainable and inclusive growth will depend on the region's ability to seize opportunities through collaboration, investment and innovation."
