A new survey by KPMG has found that West Midlands businesses remain highly confident about their growth prospects, with a clear focus on technology investment to drive future success. The report, which polled over 200 business leaders across the region, reveals that 78% expect revenue growth in the coming year, while 55% plan to increase spending on digital transformation initiatives.
Survey highlights optimism amid economic challenges
The KPMG West Midlands Business Outlook Survey, conducted in early 2025, shows that despite ongoing economic pressures such as inflation and supply chain disruptions, local businesses are determined to invest in innovation. According to the report, the confidence index stands at 72 out of 100, up three points from the previous year. Key sectors driving optimism include manufacturing, technology, and professional services.
One of the most striking findings is the emphasis on technology. More than half of respondents (55%) said they will increase their technology budgets in the next 12 months, with artificial intelligence (AI), cloud computing, and cybersecurity identified as top priorities.
Tech investment as a competitive advantage
Sarah Murphy, Office Senior Partner at KPMG in the Midlands, commented: “West Midlands businesses are showing remarkable resilience and foresight. They recognize that investing in technology is not just about keeping pace, but about gaining a competitive edge. The survey shows a clear commitment to digital transformation across all sectors.” The report notes that 62% of businesses that plan to invest in tech expect to see improved operational efficiency, while 48% aim to enhance customer experience.
Sector-specific trends and regional strengths
Manufacturing, a cornerstone of the West Midlands economy, is leading the charge. Over 60% of manufacturing firms surveyed intend to adopt smart factory technologies and automation. Meanwhile, the region’s growing tech sector—concentrated in Birmingham and Coventry—is focused on scaling AI and data analytics capabilities. Professional services firms are also increasing investment in digital tools, particularly for remote work and client collaboration.
The survey also highlights that 70% of businesses are actively seeking partnerships with universities and research institutions to drive innovation. This aligns with the region’s strong academic base, including the University of Birmingham and Warwick University.
Challenges and outlook
Despite the positive outlook, businesses are not blind to risks. More than a third (34%) cited rising costs as their biggest concern, followed by skills shortages (28%) and regulatory changes (16%). To address the skills gap, 41% of firms plan to increase investment in staff training, particularly in digital skills.
“The challenge for the West Midlands is to ensure that the pipeline of tech talent matches the ambition of its businesses,” added Murphy. “Collaboration between education providers and industry will be critical.”
Implications for the regional economy
The KPMG survey suggests that the West Midlands is well-positioned to maintain its status as a key driver of UK economic growth. With plans for significant tech investment, the region could see job creation and productivity gains. The report estimates that if all planned tech investments materialize, the regional economy could grow by an additional 2% over the next two years.
Business leaders are also looking beyond the region: 45% of respondents said they plan to expand into new international markets, leveraging technology to manage cross-border operations. This international outlook, combined with a strong domestic focus on innovation, paints a picture of a dynamic and forward-looking business community.
