Key Industries Driving The West Midlands Economy - The Redditch Standard

Key Industries Driving The West Midlands Economy

Redditch Editorial 16th Aug, 2023   0

The West Midlands is the fastest-growing economic region in the United Kingdom outside of London and has one of the country’s highest concentrations of businesses. The West Midlands was historically a hub for the manufacturing industry. However, in recent decades it has shifted its focus to service industries like finance and insurance, healthcare and defence, government and nonprofits, and retail and supply chain.

The West Midlands economy is also one of the most diverse in the UK, with a wide range of industries contributing to its growth. In recent years, several key industries have emerged as drivers of the region’s economy.

Fintech

The expanding Fintech industry in the West Midlands originates in the region’s robust ecosystem of B2B and B2C firms, with an eye-catching addition of companies trading forex. The thriving local start-up environment is supported by many innovation hubs, incubators, and technological accelerators available to new participants in the area.

With a burgeoning network of local innovators and international investors in Fintech and forex trading, the region serves as a testing ground for developing and adopting new technologies. The West Midlands is one of only three areas in the United Kingdom designated as “Fintech hubs” by the government.




Advanced Manufacturing Sector

The manufacturing sector is one of the key industries driving the West Midlands economy, despite experiencing a decline in recent years. It accounts for only 11% of jobs in the city region, a sharp decrease from the 43% recorded in 1981.

Despite challenges, manufacturing is crucial to the region’s economic landscape. One of the key indicators of its importance is its contribution to the UK’s exports. According to the manufacturing trade body, the region accounted for over 10% of all UK exports in 2016, the second-highest of any area.


The region has also witnessed a remarkable increase in manufacturing jobs. There has been a fourfold growth in manufacturing jobs since 2010.

In terms of Gross Value Added (GVA), the sector generates over £16 billion for the national economy.

Cultural and Creative Industries

The Cultural and Creative Industries have emerged as one of the driving forces behind the West Midlands economy, solidifying the region’s position as a vibrant hub for arts, entertainment, and innovation. With the third-largest cultural sector in the UK, trailing only behind London and Greater Manchester, the West Midlands has established itself as a powerhouse in the creative landscape.

The impact of Cultural Industries on regional employment is noteworthy. More than 40,000 individuals find work within these industries, showcasing the significant opportunities they offer the local workforce. Notably, over 10,000 creative enterprises contribute to the region’s economic vibrancy, fostering a culture of entrepreneurship and creativity.

The cultural sector, in particular, plays a substantial role in job creation, directly employing over 16,000 individuals. The ripple effect of the cultural sector extends beyond direct employment, influencing an estimated 22,700 other jobs in related industries, illustrating its vast potential to bolster economic growth and prosperity in the region.

In terms of economic contribution, the combined Cultural and Creative Industries surpass several key sectors traditionally considered significant drivers of the economy. These include construction, life sciences, healthcare, logistics, and transport technologies, as well as low carbon and environmental technology sectors, in terms of Gross Value Added (GVA)

Creative and Digital Technologies

Employing a staggering 76,000 individuals, the Creative and Digital Technologies industry has rapidly become a significant source of employment and opportunity for the local workforce. The industry’s rapid expansion and innovation have created diverse job roles, attracting tech enthusiasts, creatives, and entrepreneurs and contributing to the region’s overall economic growth.

The region’s prowess in this sector is particularly evident in the gaming industry, which commands an impressive 25% share of the UK’s games market output.

The Creative and Digital Technologies sector’s economic impact extends beyond regional boundaries. It is projected to have a remarkable £2.7 billion boost to the national economy by 2025.

Business, Professional & Financial Services (BPFS)

The Business, Professional, and Financial Services (BPFS) cluster in the West Midlands is one of the largest and fastest-growing in Europe. That’s 48,400 businesses that collectively employ over 343,000 people.

The industry has had such tremendous demand that it has expanded by 30% during the past five years. The West Midlands has established itself as a hospitable market where financial services, technology-enabled financial services, insurance, and other professional service businesses can develop and thrive. The city of Birmingham leads the UK’s BPFS industry.

Insurance and long-term savings industry

The Cities’ economies rely heavily on the insurance and long-term savings sector. Approximately 75% of the workforce is located in non-capital cities.

The insurance industry is a significant and expanding part of the West Midlands economy, directly employing approximately 13,000 people, 7,800 of whom are located in Birmingham alone. Several large insurance companies have headquarters in the West Midlands, including Wesleyan Assurance, Phoenix Life, Allianz, and Zurich.

Birmingham received £850 million from the industry in 2015, and the West Midlands received £1.2 billion, both of which contributed to the growth of the Midlands Engine.

Future Mobility

The West Midlands is the preferred location for many international car, plane, and train manufacturers. Continuing its tradition as the centre of manufacturing, the area is now also the nerve centre of transport innovation in the United Kingdom. The region’s automobile industry has increased by 16% in the last four years. The West Midlands comprises 21% of the United Kingdom’s automobile parts and accessories producers. Range Rovers are sold worldwide; autonomous vehicles are tested in Birmingham, while Electric taxis are produced in Coventry.

Bottom Line

The region’s remarkable growth trajectory owes much to its diversified economy, with advanced manufacturing, automotive, aerospace, and service sectors leading. As we look to the future, it is evident that the West Midlands is well-positioned to maintain its upward trajectory, forging ahead as a powerhouse of innovation, productivity, and prosperity. The collaborative efforts between public and private stakeholders have undoubtedly played a vital role in fostering this growth, and it is essential to continue nurturing these partnerships to sustain long-term development.

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