Birmingham and the wider West Midlands is proving a magnet for record levels of foreign investment and visitor numbers – despite rising inflation and increased labour costs.
The annual Birmingham Economic Review paints an upbeat picture of a city viewed by the outside world as a “great place to invest” – and 65 per cent of businesses across Greater Birmingham expect an increase in turnover over the next few months.
But the review – produced by the City-Region Economic and Development Institute (City-REDI) at the University of Birmingham and the Greater Birmingham Chambers of Commerce – also warns that recovery post-pandemic has been slower in the West Midlands than in other UK regions. The region’s slow fightback from the UK’s worst medical emergency for 100 years has been offset by a rebound from the city’s Business, Professional and Financial Services sector, which has “adapted well,” only shrinking by 1.1 per cent between 2019 and 2021.
The report reveals that the West Midlands attracted the largest share of foreign direct investment outside London, with 181 FDI projects in 2022-23, an increase of 171 per cent on the previous 12 months. Overseas investors created a total of 8,252 jobs, a 48 per cent increase compared to 2021-22, with the Commonwealth Games playing “a key role” in the upsurge.
Meanwhile 2022 – the year of the Games – saw 141.2 million visitors flock to the West Midlands, a 38 per cent increase since 2021 and a five per cent rise compared to 2019. Spending by visitors rose to £14.1 billion, a 39 per cent increase since 2021 and a seven per cent rise compared to 2019. By contrast, skill attainment remains below average with 10.9 per cent of economically active people aged 16 and over in Greater Birmingham having no qualifications whilst Birmingham is ranked as the seventh most deprived local authority in England, a rating unchanged since 2015.
Henrietta Brealey (pictured), chief executive of Greater Birmingham Chambers of Commerce, said: “Our report shows Birmingham and the West Midlands attracting record levels of foreign direct investment and visitor numbers, with a transformed city centre and extensive regeneration underway.
“Businesses remain optimistic. A deeper devolution deal for the West Midlands Combined Authority has provided more regional leadership and control in key areas, enabling interventions tailored to the needs of the region.
“This is all against a backdrop of significant economic uncertainty as rising inflation, interest rates, labour costs and more squeeze businesses. Despite all this, the fundamentals that make Birmingham a great place to invest and do business remain compelling.”
Rebecca Riley, associate professor, City-REDI at the University of Birmingham, said: “The UK economy continues to experience a series of economic shocks. This year the Ukraine situation has continued sending shocks through supply chains, adding to the worsening cost of living crisis, and ongoing uncertainties around interest rates, debt and the strength of our currency.
“The West Midlands region has been hit harder than most by the effects of these shocks due to the sectoral mix and exposure to the cost impacts and the underlying health of the population.
“GBSLEP GVA declined by 5.2 per cent in 2020 and recovery has been slower in the wider West Midlands than in other UK regions, as the region has struggled to recover.
“However, the Business, Professional and Financial Services sector, the city’s largest sector and responsible for growth before the pandemic, adapted well and is rebounding, growing by 1.4 per cent between 2019 and 2021.”
