BLM reviews the UK’s second city as a leading business destination; looking at the key sectors shaping the region and finding out why global firms are relocating here.
The UK’s ‘second city’, Birmingham is frequently chosen by domestic and international companies as the ideal location to establish their business.
In recent years, Birmingham has shed its historic image of a grey and dreary manufacturing town, into one of Europe’s most influential business hubs.
The city was voted the most investable location in the UK by PwC and the Urban Land Institute’s Emerging Trends in Real Estate 2019 survey, where it was also ranked as having the best investment prospectus by over 800 real estate professionals in Europe.
Further investigation by the Centre for Entrepreneurs found that Birmingham is also the most entrepreneurial UK city outside London.
It isn’t just the business side of the city that separates it from other destinations in the UK. The region’s cosmopolitan, vibrant landscape is reflected in Mercer’s global Quality of Living Report, which ranks Birmingham in the world’s top 50, ahead of major global cities including Dubai, Hong Kong and Rome.
So, why is the city such a desirable business location? BLM investigates.
What sets Birmingham apart?
There are many advantages that can be attributed to Birmingham as a business hub. Located at the centre of the UK, Birmingham is the best-connected location by air, road and rail for travel, both nationally and overseas, as it is within a four-hour drive for 90% of the population.
Alongside this, the city welcomes nearly 13 million passengers each year, and Birmingham Airport flies to more than 140 international and domestic routes which are serviced by 50 airlines.
The city will be at the heart of the new HS2 network, which will bring people and goods to and from London within 38 minutes and improve connectivity to the northern regions.
Andy Street, the former Managing Director of John Lewis and the Mayor of the West Midlands Combined Authority comments: “The West Midlands is ideally placed for connectivity and transport links as it is, quite literally, in the middle of the country. HS2 is only going to strengthen that, and I am confident any review of the plans will see that the pros far outweigh any cons. Locally, we have a vastly improved transport offering, including trams, buses and trains that are all seeing increased patronage.”
Sam Hufton, Digital Director at web development firm M3 continues: “Traditionally, the biggest challenge to Birmingham is the distance to London. However, this challenge is decreasing, as more businesses are looking to move away from the capital and see the second city as an ideal new home. Once HS2 is completed, this will be another shot in the arm and further reduce the need to be located in London.”
And it isn’t just its connectivity that sets the city apart.
Birmingham’s population is one of the UK’s most diverse. Its varied community comprises 190 nationalities, with more people speaking French, German, Polish, Russian, Urdu and Mandarin Chinese as a first language than any other regional core city. Major global companies have invested in the city because of its talent pool’s diverse language skills, which are vital for servicing overseas markets.
In terms of having the right skills for a business, 228,000 people in Birmingham are qualified to degree level or above – more than any other regional city.
It is this diversity that has led to The West Midlands Combined Authority reporting the highest levels of employment in fintech, transport tech, medtech, as well as its historical links to manufacturing and construction.
Street comments: “Birmingham is an incredibly attractive business destination. We have the fastest growing economy of any UK city region, our wage levels are rising as quickly as anywhere else in the UK, and we have 145,000m2 of prime office space under development.
“As well as being home to global brands like Jaguar Land Rover, JCB, AGA and Cadbury, the West Midlands is also a proven winner. We have secured the 2022 Commonwealth Games, we are the UK’s first 5G testing hub, and in 2016 we secured a ground-breaking devolution deal, helping to devolve more than £2bn. I opened one of John Lewis’s biggest stores here, HSBC UK has relocated its headquarters and PWC is investing millions. Big firms know the West Midlands is the place to be, and so do residents. Last year more people moved from London to the West Midlands than anywhere else in the country.”
What are the key sectors?
Moving away from historical links to industry, Birmingham is establishing itself as a true modern business destination.
Birmingham has a burgeoning Business, Professional and Financial Services (BPFS) sector, with over 4,300 financial and professional services companies. These alone employ over 50,000 people, making it the largest regional cluster outside of London. This spike in activity has been grown within the city, as Birmingham has more business students than any other regional city outside of London.
Due to this growth, the city is now a destination of choice for major companies, including the Big Four, PwC, KPMG, Deloitte and EY, who all have their largest regional offices based in the city. Big name banks also call Birmingham home, with HSBC, Deutsche Bank, Metro Bank and Secure Trust Bank all investing in the city in recent years.
Discussing the scope of the region’s BPFS sector, Matthew Hammond, Chairman of the West Midlands Growth Company and Midlands Region Chairman and Senior Partner at PwC, said: “The West Midlands’ BPFS sector has an extremely advantageous feature in the form of its critical mass. There is a high density of large corporates operating here, serving clients based nationally and internationally.
“The region’s pool of high-calibre talent also allows the sector to thrive, as the internationally-renowned universities in the West Midlands are consistently ranked in the top ten best institutions in the country.”
Global firms are consequently attracting more and more young professionals to pursue their business, professional and financial services careers in Birmingham as opposed to London. According to Office for National Statistics (ONS) data, more people are moving from the capital to the West Midlands than to any other UK regional area, with Birmingham attracting more people away from London than it is losing.
In total, the West Midlands’ BPFS cluster generated £24.5bn GVA annually, and is the region’s most significant sector, responsible for almost a third of its total GVA.
One of the world’s leading brands and financial institutions last year made the decision to relocate its UK HQ to the city. So, why did HSBC make this decision?
Investing £200m in a purpose-built, ten-storey facility and relocating 1,000 jobs from across its UK and international operations, the bank chose Birmingham because of the strength of its transport links, talent pool and wider business supply chain.
Ian Stuart, CEO of HSBC UK, said: “We needed a solid base from which to operate and somewhere with a large, talented workforce to recruit from. Birmingham is dynamic and entrepreneurial; it is the UK’s second city for financial services and a leading start-up hub.
“We required somewhere colleagues would want to move to. Birmingham offered a fantastic quality of life, affordable and decent housing and the amenities our employees would want. Birmingham cements HSBC UK’s position right at the heart of the UK, helping us to get closer to our 14.5 million customers and 32,000 employees right across the country.”
What are the emerging industries?
It isn’t just global institutions that are taking advantage of the current business climate in Birmingham. All types of companies across a wide range of sectors are looking to the city to grow their firm.
Birmingham is the largest regional tech cluster in the UK, according to ONS, with over 65,000 people working in tech roles at over 12,450 businesses
The West Midlands region boasts a rich supply chain of technology companies, spanning key sectors such as fintech, cybersecurity and gaming, and has been referred to as ‘Silicon Spa’. A mix of global companies and start-ups are now based in the city, with more software developers, programmers and software architects than any other regional city in the UK and, according to Monster research, is the best place in the UK for digital jobs.
Tech is the fastest growing sector in Birmingham, with property group JLL and business consultancy Tech City UK predicting it will add £1.1bn in GVA to the economy by 2022. It is this growth that was a key factor for the city being chosen as the UK’s first multi-city test-bed for 5G.
Vodafone recently began its live test of 5G technology at Birmingham New Street train station. This makes it the first 5G-connected train station in the UK.
Anne Sheehan, Director of Vodafone Business said: “We are delighted to bring 5G to the West Midlands, giving businesses, residents and visitors fast and reliable connectivity even in exceptionally busy locations such as train stations and airports. 5G will enable new applications and experiences and support the development of connected cities and smart transport solutions.
“It will help businesses to implement emerging technologies such as artificial intelligence (AI), Internet of Things (IoT) and robotics. We look forward to continuing to work with Andy Street and his team to deliver the vision of a more prosperous and digitally connected region.”
What does the future hold?
The future for the city is very bright, and its standing on the world’s stage was recently highlighted by figures from the Department of International trade, who stated that the West Midlands is the leading regional location for attracting Foreign Direct Investment (FDI) outside of London and the South East.
This international standing holds the region in good stead for the future, especially with the expansions happening across the city.
Birmingham Airport is undergoing an ambitious £500m expansion to grow passenger numbers by 40% to 18 million by 2033. The works will see the airport’s departures terminal extended to increase capacity and improve facilities. The development will create 34,000 jobs for local people and generate over £2bn of economic benefit for the region.
Having a greater transportation hub will also be a key factor for the upcoming 2022 Commonwealth Games, which is set to transform the city. Birmingham and the West Midlands region will benefit from a £778m investment to stage the games.
The evidence from previous host cities demonstrates the significant benefits of staging the Games. Gold Coast 2018 Games is expected to have delivered a £1.3bn boost to the Queensland economy.
David Grevemberg CBE, Chief Executive of the Commonwealth Games Federation, said: “The Birmingham Commonwealth Games is an important milestone that will enable the West Midlands to deliver a hugely successful multi-sport competition in 2022. The games will provide a huge boost to Birmingham and act as a stimulus package for regeneration, social cohesion and economic diversification.”