Birmingham is poised to become ‘the beating heart of a new economic era’ thanks to Artificial Intelligence and other emerging industries, economic report says.
The 2025 Birmingham Economic Review, produced by the City-Region Economic Development Institute (City-REDI) at the University of Birmingham and the Greater Birmingham Chambers of Commerce, outlines the opportunities in AI, clean energy, and life sciences are providing for the city-region’s economy.
Whilst Birmingham and the Greater Birmingham area have faced challenges, high levels of foreign direct investment (FDI), growing tourism numbers and emerging science and technology clusters have meant that the local and regional economy has remained resilient.
The West Midlands continues to lead Foreign Direct Investment (FDI) outside London with 130 projects in 2024–25. The region is now home to around 180 AI firms - 1.8 per cent of the UK total - and 59 of these were established during the first 10 months of 2025.
Birmingham is no longer just a city in the middle of the UK; it’s becoming the beating heart of a new economic era. It’s where cutting-edge research meets real-world impact, where start-ups scale fast, and where international investors find fertile ground.
While digital skills shortages and limited data infrastructure remain barriers to growth, the review says the region’s strong university base and potential for AI-focused infrastructure investment offer growth prospects.
Professor Rebecca Riley, deputy pro vice chancellor for Regional Engagement and co-director of City-REDI, said: “Birmingham is no longer just a city in the middle of the UK, it’s becoming the beating heart of a new economic era. It’s where cutting-edge research meets real-world impact, where start-ups scale fast, and where international investors find fertile ground.
“Globally, we’re forging new trade links, attracting talent from every continent, and showcasing how a diverse, youthful population can fuel creativity and competitiveness. With HS2 on the horizon, a thriving university sector, and bold devolution powers, Birmingham isn’t just keeping pace, it’s setting the pace.”
However, the region is not immune to economic challenges such as rising costs and inflationary pressures. Exports fell amid global uncertainty and proposed US automotive tariffs, which had ‘an outsized impact’ on the region. Additionally, challenges in the workforce, including rising levels of work-limiting disability, digital skills shortages and unequal access to technology, risk widening existing inequalities if unaddressed.
The West Midlands remains a leading destination for foreign direct investment outside London. Innovation capacity is strengthening, and infrastructure investment continues to underpin long-term competitiveness.
Raj Kandola, acting deputy CEO at Greater Birmingham Chambers of Commerce, said: “The data in this review tells a story of resilience. The West Midlands remains a leading destination for foreign direct investment outside London. Innovation capacity is strengthening, and infrastructure investment continues to underpin long-term competitiveness.
“Nevertheless, challenges remain. Inflation is still the highest among G7 nations, and interest rates have stabilised at 4 per cent, constraining access to finance. Export performance has weakened. Though employment is at historic highs, labour market pressures persist, with unemployment and economic inactivity above national averages, and health-related inactivity emerging as a significant barrier to productivity.”
According to the report, if Birmingham and Greater Birmingham and the wider West Midlands region can address these challenges, it is well positioned to capitalise on the opportunities created by these emerging industry clusters.
Read the full 2025 Birmingham Economic Review on the Chamber of Commerce Website.
For media inquiries, please contact Ellie Hail, Communications Officer, University of Birmingham on +44 (0)7966 311 409. Out-of-hours, please call +44 (0) 121 414 2772.
Professor Enterprise, Engagement, and Impact
Rebecca Riley is a Professor of Enterprise of Engagement, and Impact in City-REDI, within Birmingham Business School, University of Birmingham, UK.
