West Midlands Giant Bucks Trend For Northern Decline With Consistent Growth Set To Deliver Over 24,000 New Jobs
A new economic report predicts that Birmingham is set to see its economy grow by £1bn by the end of 2023, bucking the trend for the most successful cities to be found in Southern England.
According to Irwin Mitchell’s UK Powerhouse report, produced by the Centre for Economics and Business Research (Cebr), Birmingham delivered 6.9% GVA* growth in the 12 months to Q4 2021, placing it 7th out of the best performing cities in the UK for economic output.
By the end of 2023, Birmingham is one of the few cities outside of the South to retain its position, remaining 7th for growth, with year-on-year GVA of 2.3% and an economy worth £27bn. The city is also set to improve its employment performance, rising to 7th in the report’s league table and delivering over 24,000 new jobs.
Eight of the top 10 fastest growing cities in the UK by Q4 2023 are expected to be located in the South and East of England, with Birmingham and Edinburgh the only two outliers.
The report highlights several factors behind Birmingham’s strong performance, including major projects like HS2, plus a regional housing boom fuelling a burgeoning real estate sector.
Significantly, the West Midlands is also the highest placed northern region for attracting Foreign Direct Investment (FDI)** , a factor the report highlights as a vital component for economic growth enjoyed by cities in the South and East of England.
For the government’s levelling up agenda to be successful, the report makes clear that other regions need to lure more FDI to their cities to compete with their southern rivals. Cities like Birmingham are proof that with the right conditions, growth in FDI can be achieved.
A combination of local and national government backing, FDI friendly policies, coupled with new business investment will be essential to see the so called ‘Midlands Engine’ become a reality and deliver levelling up in real terms.
Bryan Bletso, partner and Head of International at Irwin Mitchell, said: “Birmingham’s performance to date and its projected strong economic outlook in terms of growth and jobs is an example to the rest of the UK of what levelling up could start to look like in practice.
“If more cities outside the south can be given the tools to attract new FDI, there is every prospect that it can compete with counterparts such as Milton Keynes and Cambridge on a more level economic playing field.
“While the West Midlands currently sits in third place for FDI, it is on the shoulder of the South East and with support there’s no reason why it can’t take the next step.
“As the county looks to improve its economic position on a global stage post pandemic and Brexit, we will need our big cities in the North and Midlands to continue to prosper. Luring more FDI northwards will be key if the much vaunted levelling up agenda is to bear fruit.”
* GVA – Gross Value Added (the total value of goods and services produced)
** Foreign Direct Investment (FDI) refers to cross-border flows where an investor establishes a lasting interest in a subsidiary located in a country that is not the investor’s. Typically, 10.0% or more of the organisation’s voting power should be controlled by the foreign investor for this to represent a lasting interest.