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Review: investment points to success, but skills challenge remains

Review: investment points to success, but skills challenge remains

0 Comments 🕔12.Oct 2018

Current investment in infrastructure and technology will underpin future economic success in Birmingham, according to a report published today, reports Kevin Johnson.

However, the report again highlights issues with skills, employment and productivity.

The second Birmingham Economic Review 2018 is being launched by Greater Birmingham Chambers of Commerce (GBCC) and University of Birmingham’s City-Region Economic Development Institute (REDI) this morning.

The report estimates that the city’s digital sector has contributed £1.4 billion to GVA and created 36,802 jobs in 2017.

The Review highlights the impact that infrastructure investments will have on the West Midlands. High Speed Rail, Midland Metro Extensions, 5G networks and high-fibre broadband are identified as enhancing connectivity across the region.

Nigel Driffield, Professor of International Business at Warwick Business School and Deputy Pro Vice Chancellor for Regional Engagement, says in the report:

The Birmingham city region continues to do the best for inward investment outside London.

If one takes as a benchmark that foreign firms have on average 15-20% higher productivity than local firms, and that a high proportion of inward investment for the WMCA region is in sectors with above average productivity, then this indicates the importance that attracting and retaining inward investment has for the local economy.

The increase in demand for both homes and business premises has been heeded as a warning in the report as high-quality business premises are now in short supply. The development of strategic employment sites across Birmingham must be prioritised as a matter of urgency, say the authors.

The report states that residents in the city are less likely to have high-level qualifications and more likely to have few or no qualifications compared to national figures.

The region still lags behind national rates for unemployment, with Birmingham’s employment estimated at 63.6 per cent in 2017 compared to the national rate of 74.9 per cent.

A high GVA growth rate is identified as strength in the report, whilst improving the survival rate of new businesses through targeted support is seen as an opportunity.

The impact of Brexit on the economy and the prevalence of low-value, low-wage, low-skill work are listed as the top two challenges.

The report states that the business, professional and financial services (BPFS) sector is twice the size of manufacturing and engineering in the region, accounts for 28.2% of GVA and 1 in 5 jobs. Employment in the sector is set to grow by 31%, with its contribution to GVA set to double by 2030.

Birmingham is the only place outside of London where you can access the full range of services within the sector.

The main challenges for the BPFS sector are attracting and retaining staff to the region, and to the sector more broadly. BPFS still suffers from a lack of understanding of opportunities as well as an outdated perception of Birmingham’s lifestyle offer says the report.

The Review suggests the BPFS sector “may be underperforming.” The main challenge is innovation, especially where clients are not innovative and constrain change, within a risk-averse economic climate.

Professor Simon Collinson, deputy pro vice-chancellor at the University of Birmingham and Director of City-REDI said:

Building on the economic momentum we have already achieved, more firms are investing, more businesses are starting up, and more high-skilled, talented people are coming to our city-region to work, than we have seen in over a decade.

Evidence presented in this year’s Birmingham Economic Review shows how and why we are increasingly attractive as a location for leading firms.

Paul Faulkner, chief executive of the GBCC, said:

We hope that this review again helps advise our members as they make investment decisions in our uncertain political climate, as our formal exit from the European Union approaches.

There is no doubt that there are challenges ahead for the region, however the Birmingham Economic Review provides much optimism and demonstrates the region’s resilience and strength for the future.

John Crabtree, Lord Lieutenant for the West Midlands and chair of the 2022 Commonwealth Games organising committee said:

We are not only demographically the youngest city in Europe, but also one of the richest and most diverse.

The many new citizens we have welcomed have had much to do with our improving economic fortunes.

We have all the ingredients necessary to become the exemplar of the modern global city…if we do our job properly, we will have 24 months to secure lasting legacies for the entire Midlands with the City of Culture stewarded from Coventry and then the Commonwealth Games headlined in Birmingham.

Main pic: Paul Faulkner, Greater Birmingham Chambers of Commerce

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