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Birmingham firms weigh next moves on investment as review flags falling confidence
The 2025 economic snapshot shows resilience in jobs and foreign projects but highlights tough choices for local businesses facing higher costs and weaker exports.
How we reported this
Birmingham’s economy posted 1.4 percent growth in 2023, according to the Birmingham Economic Review 2025, even as wider trade tensions and inflation pressures built through 2025.
The figures arrive at a moment when companies must decide whether to press ahead with capital spending or hold back. Inflation reached 4.1 percent in August 2025, the highest rate among G7 countries, and the Bank of England held interest rates at 4 percent. Those conditions have already prompted many firms to delay projects and trim research budgets.
Local investment signals
Greater Birmingham and Solihull counted 72,620 enterprises in 2024. The West Midlands attracted 130 foreign direct investment projects in the year to 2025, more than any other UK region outside London. Over £800 million in new investment was announced during 2025, including £400 million earmarked for the Birmingham Knowledge Quarter and £50 million in co-investment drawn by the West Midlands Health Technology Innovation Accelerator after a £14.5 million government grant.
Business start-up rates continued to exceed national averages, and employment held steady in advanced manufacturing, professional services and health technologies. Yet overall business confidence in the region dropped from 12.9 in the second quarter of 2024 to 7.9 in the second quarter of 2025, below the UK average.
Key decisions ahead
Companies now face concrete choices on skills and digital upgrades. The review notes that health-related economic inactivity sits above national averages and is becoming a drag on productivity. Policymakers, meanwhile, must decide how to use devolution powers and infrastructure projects such as HS2 and the Midlands Rail Hub to improve access to finance and training places.
West Midlands gross domestic expenditure on research and development reached £5.5 billion in 2023. Sustaining that level will require fresh decisions on collaboration between universities, local firms and incoming investors in artificial intelligence, clean energy and life sciences. The Birmingham Economic Review 2025, produced by City-REDI at the University of Birmingham and the Greater Birmingham Chambers of Commerce, supplies the baseline data for those conversations.