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Birmingham Economic Review 2000

This is the sixth annual Birmingham Economic Review produced by the BEIC and the first to be published in the new millennium. To mark this occasion, we have taken the opportunity to take stock of what has been achieved in the local economy over the last decade, to identify the critical success factors and to look forward over the next 10 years.

In the first section of the review, we concentrate on current economic trends and short term prospects. Our survey based short term forecasting model predicts a quick recovery in the UK economy with year-on-year growth reaching 3 to 3.5% in 2001. A growth rate of this magnitude would quickly push up inflation. We therefore expect the Bank of England to reign back growth to a more sustainable 2.25% from 2001 onwards.

Expectations of faster growth in Europe will be good news for local manufacturing exporters and may eventually increase the value of the Euro exchange rate against the Pound, which would go some way to improving exporters price competitiveness.

The middle section of the review looks at the relative change in Birmingham's employment base and concludes that the economy is at last beginning to succeed. Growing employment is however the effect of a strengthening local economy not its cause. There are several critical factors, which will determine whether the increase in economic momentum that Birmingham has begun to enjoy will continue into the next century. It is because of improving trends in many of these factors that the City looks set for further recovery. These critical success factors which are examined in some detail include:

Skilled & Qualified Workforce
Self Employment
Capital Investment
Small Business Development
Inward Investment
Ambitious & Growing Companies
Relocating Businesses
R&D and Innovation
Enterprise
Information and Communication Technologies

Whether the Birmingham economy moves sufficiently quickly into emerging and fast growing sectors of the economy will depend on its record in developing these critical factors. However, the future of the local economy also depends on the mix of the sectors that it has inherited today and the trend in their performance relative to the UK.

In the third section, our econometric model of the Birmingham economy provides the optimistic conclusion that 68% of the City's employment is in sectors where job numbers are forecast to grow over the next 10 years. As a result, Birmingham's employment base will grow by nearly 25,000 jobs between 2000 and 2010. Whilst recognising that the local economy is still likely to under-perform the UK economy over the next decade, Birmingham has some sectors which will perform better than the UK in either output or employment. In addition, sectors with high output and growth prospects for Birmingham are Computer Services, Professional Services and Banking & Finance.

This publication is the first in a trinity of publications to mark the millennium, the other publications being the Birmingham Sectoral Review 2000 and the Birmingham Labour Market Assessment 2000.