Key Updates for February 2025

Technology shifts and political disruption amongst biggest challenges companies face in 2025

A survey conducted by Warwick Business School of 232 executives and middle managers reveals technology disruption and political instability as the biggest challenges for 2025. While middle managers prioritise adapting to technological shifts like AI, executives focus on political disruption, including the impacts of the U.S. election and global conflicts. Regional priorities differ: technology dominates in Europe, while political instability concerns Africa and Asia. With inflation easing, businesses are urged to balance investment and cost-cutting while fostering open strategy and stakeholder engagement.

A third of CEOs believe that their existing businesses are not viable in a decade without change

The 28^th annual CEO Survey conducted by pwc, a consultancy, suggests that one-third of CEOs believe that their businesses will not be viable in its current form within a decade – with two-thirds developing new business capabilities or operating models in pursuit of growth.

Urban Regeneration Key to Economic Growth

A new report by the Institute for Government underscores the importance of regenerating England's deprived urban areas to meet economic growth targets. The report uses cases studies including Bradford and Stockport to highlight metro mayors' pivotal role in leveraging powers like funding, planning, and mayoral development corporations (MDCs) to drive renewal. Recommendations include aligning regeneration with transport and skills strategies, fostering private-sector collaboration, and legislative reforms. There were no case studies in the WMCA area.

Cities Outlook 2025: focus on export-led growth

The 18^th edition of the Centre for Cities, a think tank, annual Cities Outlook 2025 publication set out their recommendations for growth.  This year’s publication focused on how the UK can “get more economic prosperity out of its cities to put more money into people’s pockets” – with a consideration on what should be on the minds of local and central governments when writing or evaluating a local growth plan. The Centre for Cities view is that it is exporters that drive productivity growth, and thus cities should encourage exporters as the engine of growth; whereas there is lower growth potential in other parts of the economy.  It also sought a focus on city centres, noting that cities occupy some 8.7% of land but host over half of new economy firms (those with the highest growth potential); and city centres, despite occupying just 0.1% of land, account for 18.4% of new economy firms.  Whereas there may be temptation for policymakers to specialise and target specific industries, Centre for Cities saw that it was important to encourage the co-location of different cutting-edge industries enabling agglomerations of different firms to create healthy ecosystems - which can then drive growth, which can then be reinvested into reforming and transforming public services.

Firms to raise prices due to tax and wage increases

The British Chambers of Commerce (BCC) reports a sharp decline in business confidence in the quarter following the Chancellor's autumn Budget. Tax concerns, including national insurance hikes, have surged to a record 63% among firms. Investment has slowed, with only 20% of businesses increasing spending, while over half expect to raise prices in the next quarter due to rising costs, especially labour. The BCC urges swift reforms in business rates, infrastructure investment, and trade deals to stabilise the economic outlook.

Social economy to gain ground in 2025 as companies see the benefits

An article by Warwick Business School highlights that in 2025, the social economy is poised to gain prominence as companies increasingly recognise the benefits of prioritising social and environmental purposes over profit. This shift is supported by impact investors, stronger governmental commitments, and potential enhancements to the UK's Social Value Act, encouraging businesses to embrace social value creation. Key benefits include improved productivity, stakeholder commitment, talent attraction, and market differentiation. A major trend is the improved use of social value data, with better measurement systems and data observatories helping identify effective social interventions. However, reconciling social and economic value narratives remains a long-term challenge.

Working poverty out

The Resolution Foundation reports that the upcoming government child poverty strategy must address the evolving landscape of parental employment and child poverty. Since the mid-2000s, employment rates for lone mothers and partnered mothers have increased significantly. However, many families in poverty face barriers to work, such as having young children, multiple children, or disabilities. The risk of poverty for working families has also risen, with more families in poverty having at least one working adult. According to the Foundation, the strategy should focus on multiple areas, including childcare, transport, employment rights, and skills, to support labour market progression and improve family incomes.

British households on low-to-middle incomes are poorer than their counterparts in many advanced economies

The Resolution Foundation has found that low-to-middle-income households in Britain are poorer than their counterparts in many advanced economies, primarily due to high housing costs, which are 44% above the OECD average. Traditional comparisons underestimate this burden because they don’t account for these households’ spending patterns, which prioritise necessities like housing and food. Adjusting for these patterns reveals a wider income gap, with poorer UK households facing significantly higher costs of living than similar families elsewhere. The findings underscore the need for tailored policy solutions. Addressing Britain's housing crisis—through building more homes and indexing housing support to local rents—can alleviate the financial pressure on poorer households and narrow the international income disparity. No British regional breakdown was provided.

Demonstrating the economic impacts of Civic Universities

A report by City-REDI, emphasises the need for universities to enhance how they measure and assess their civic and economic impact, particularly in addressing regional inequalities. The report critiques current impact assessments for being overly prescriptive and lacking a clear rationale. The report urges universities to integrate these assessments into strategic frameworks and develop more dynamic, locally contextualised evaluations to better reflect their unique contributions to society.

Declining voter turnout

A report by the Institute for Public Policy Research (IPPR) finds that in the 2024 general election, only one in every two adults in the country cast their vote, marking the lowest voter turnout since the introduction of universal suffrage. While the differences in turnout across age and income groups have remained relatively stable in recent elections, the gap between graduates and non-graduates has doubled since 2019. Additionally, the turnout gap between renters and homeowners has grown by 25% since the 2017 election. To address the escalating cycle of skewed voting patterns, the report outlines several proposals, including automatic voter registration, a £100,000 annual cap on political donors, votes for 16- and 17-year-olds and an election day service. No regional breakdown was provided.

Enhancing productivity: Work-integrated learning in the Midlands Space Cluster

A report by the Productivity Institute explores how work-integrated learning models can address skills challenges in the UK space sector, focusing on the Midlands Space Cluster. The study highlights the commitment of four universities to work-integrated learning, enhancing students' practical skills and industry readiness. Effective industry collaboration, diverse funding sources, and a balance between theoretical knowledge and practical skills are crucial for success. The report also emphasises the importance of both specialised and interdisciplinary approaches in space education, tailored to institutional strengths and local industry needs.

WMCA backs Greenpower Park with £21m

The approval of a £21m funding package has set plans in motion for a battery manufacturing and technology hub. The West Midlands Combined Authority has greenlit the funding Greenpower Park – a 5.7m sq ft hub set to create up to 6,000 jobs across battery manufacturing, recycling and research.

Jaguar Land Rover plans extension to Wolverhampton site

Car manufacturer Jaguar Land Rover has lodged plans for the extension of its Wolverhampton works as part of moves to ramp up electric vehicle production. The plans include an expansion of the firm's Electric Propulsion Manufacturing Centre, which is set to grow with 6,500 metres of additional space

The West Midlands leads the UK as the region with the highest percentage increase (9.4%) in retail businesses in the past five years

A report by SumUp, a payment provider, reveals that despite the rise of online payments, the UK's high streets are evolving rather than dying. With nearly 7,000 high streets and over 320,000 retail businesses in 2024, physical retail is adapting to new consumer demands. The branded coffee shop market is expected to exceed 10,500 outlets by January 2025, and significant investments like the £150 million pedestrianisation of Oxford Street indicate a vibrant future for high streets. Key findings include the West Midlands leading in retail business growth, Aberdeen seeing the highest increase in retail businesses, and notable growth in hairdressing, beauty, takeaway food shops, and telecommunication equipment stores across various cities.

Educational spending in England

A report by the Institute of Fiscal Studies (IFS) highlights trends in education spending in England, showing a real-terms decline in total public spending since 2010–11, despite rising participation rates. Early years funding has grown significantly, particularly for younger children, but challenges persist in cost pressures and supply gaps. School funding per pupil has recovered to 2010 levels, but high needs spending is rising, constraining budgets. Further education and adult skills funding remains below 2010 levels, with significant financial pressures on colleges. Higher education faces declining real-terms funding per student and financial risks from reduced international student numbers and stagnant maintenance support. The report underscores the need for strategic investment to address financial uncertainties and support educational growth across all levels. No regional breakdown is provided.

The future of Level 7 apprenticeships

The new 'Growth and Skills Levy' aims to rebalance funding towards young people and entry-level training opportunities. Critics argue that reducing funding for Level 7 apprenticeships (equivalent to a master’s degree) could harm social mobility and employer flexibility. However, a briefing by the Social Market Foundation (SMF) challenges these concerns. Findings show that 1 in 6 apprenticeships are taken by university graduates, with significant funds used for Level 7 apprenticeships and management courses. The SMF recommends banning those already qualified at Level 6 or higher from accessing levy-funded apprenticeships, removing management training courses from the apprenticeship system, and requiring employers to cover up to 50% of non-apprenticeship training costs to ensure better value for money.

Student career readiness in 2023/24

The Careers & Enterprise Company's report on the 2023/24 Future Skills Questionnaire (FSQ) reveals key insights from nearly 250,000 students across England. The FSQ, part of the Compass+ careers programme, tracks students' career readiness (regional readiness is not highlighted). The report highlights that students show high interest in sectors like construction, digital, and health, and feel more career ready as they progress through school. However, economically disadvantaged students and girls face challenges that quality careers education can mitigate. By age 16, students feel confident in most work-related skills but need improvement in speaking, listening, leadership, and teamwork. The report underscores the importance of aligning career education with labour market needs and early intervention to build essential skills.

New regional skills projects to bolster UK cyber defences and deliver on Plan for Change

The Department for Science, Innovation and Technology has announced over 30 projects across England and Northern Ireland aimed at boosting the UK's cyber resilience. These projects, funded by £1.9 million from the UK government and private sources, will enhance cyber defences and address the cyber skills shortage. Initiatives include upskilling workers, encouraging neurodiverse talent, and protections against cyber violence. A project in the West Midlands will focus on supporting women and girls to protect them from cyber violence and abuse.

Examining geographical gaps in ageing

A report by the Resolution Foundation finds that over the past five decades, the UK's median age has increased from 34 to 41, leading to significant public policy challenges, particularly in elderly care. This ageing trend varies across regions, with some areas ageing faster than others. Notably, there are large age gaps between the oldest areas, like North Norfolk (median age 55), and the youngest, such as Tower Hamlets (median age 31). Coastal and rural areas, especially in Scotland, are ageing the fastest. Cities remain younger due to attracting young migrants, but London has aged more than other large cities recently due to lower birth rates and fewer young international migrants post-Brexit. These demographic shifts impact local public services, with schools facing declining student numbers and areas with large elderly populations struggling to fund adequate social care. In the WMCA area the median is only 36.6, with the youngest median age seen in Birmingham at 34.0 years and the oldest median age seen in Solihull at 42.8 years.

Rising interest rates erode razor thin margin against Government’s fiscal targets

An article by the Institute of Fiscal Studies (IFS), highlights that rising debt interest rates are putting increased pressure on the Chancellor’s ability to meet the government’s fiscal targets, particularly the goal of balancing the current budget. While debt interest spending has been below recent forecasts, a sustained rise in borrowing costs could add £8 billion annually to debt interest spending within four years, eroding the already slim surplus of £10 billion forecasted in the October 2024 Budget. Historical trends show frequent revisions to borrowing forecasts, often upward, further highlighting the risks of relying on narrow margins. Meeting fiscal rules may necessitate tax increases or spending cuts in the near future.

A recent rise in home ownership rates for 25-34 year olds

The Resolution Foundation, an independent think tank, finds that homeownership rates and housing affordability have improved for 25-34-year-olds, with ownership rising to 31% in 2022 from a 2015-16 low, and the share of income spent on housing falling to 22%. However, ownership remains far below 1990 levels (55%), with significant disparities across income groups. Low-income families face disproportionately high housing costs, limited savings, and worsened mental health. To address these challenges, the government must prioritise building 1.5 million homes and re-link Local Housing Allowance to market rents to improve affordability and access.

Rates of co-residence with parents among those aged 25-34 varies across income, region and ethnicity

A report by the Institute of Fiscal Studies (IFS) examines the growing trend of young adults in the UK co-residing with their parents. The proportion of adults in their 20s and 30s living at home has increased significantly over the past two decades, with 18% of 25 to 34-year-olds co-residing in 2024, up from 13% in 2006. The trend is more pronounced among men, those from Bangladeshi and Indian ethnic minority groups, and those on lower incomes. High house prices and declining housing affordability appear to be key drivers. Regional differences are notable, with areas of higher house price growth seeing greater increases in co-residence rates. The West Midlands is notable for having the second lowest co-residence rate for 25 to 35-year-olds in 2023-24.

Reforming LGPS to Drive Housing Investment

The Local Government Pension Scheme (LGPS) could play a pivotal role in addressing the UK housing crisis, which combines low supply, a lack of affordable homes, and rising housing costs. A government-backed research project, New Stable, explores how LGPS investments, aligned with state funding and private finance, can catalyse large-scale housing delivery. By reforming regulatory frameworks and ensuring fiduciary compliance, LGPS could unlock significant socio-economic benefits, boost council capabilities, and accelerate housing and infrastructure growth nationwide.

Bus services cut disproportionately in deprived areas of England

People in deprived areas of England have faced disproportionately larger cuts to bus services, according to the Institute for Public Policy Research (IPPR) North. The analysis shows that the most deprived areas experienced a ten-fold larger reduction in bus travel distance per person compared to the least deprived areas. This has exacerbated deprivation by limiting access to work, education, and services. The report calls for the government to use new legislation to give local leaders control over bus services, citing the successful franchising model in Greater Manchester.

New car purchases have fallen since their peak in 2016 and

New car purchases in the UK have declined since their peak in 2016, and fewer young people are obtaining driving licenses. An article by City-REDI explores when the UK might reach "peak car." This trend is influenced by lower disposable incomes and changing preferences. The share of electric vehicles (EVs) in new purchases is rising, potentially reaching 100% by 2030. For the West Midlands, this shift presents opportunities in the EV economy, environmental benefits, health improvements, and enhanced community wellbeing. However, it also poses risks to the automotive industry, social equity, and regional resilience. Policy responses should focus on adapting transport infrastructure, promoting active travel, supporting the transition to EV production, and aligning skills training with future demands.

Moving forward: Imagining a sustainable transport system

A publication by the New Economics Foundation examines UK transport through the lens of universal basic services (UBS), aiming to meet human needs within planetary boundaries. It advocates for eco-social policies that integrate environmental and social goals. The paper focuses on passenger transport modes like buses, trains, cars, planes, and active travel, outlining the current state of UK transport and proposing transformations for a sustainable system. It also highlights government legislative proposals and practical examples from the UK and Europe, offering insights and recommendations for achieving a universal and sufficient transport service.

The 2025–26 English Local Government Finance Settlement explained

The Institute for Fiscal Studies (IFS) reports a significant increase in councils' core funding for next year, with a £3.8 billion rise (6.3% in cash terms, 3.8% in real terms). This includes higher revenues from council tax and business rates, a £0.9 billion boost to the Social Care Grant, and new grants for children's social care and recovery efforts. The Services Grant and Rural Services Delivery Grant will be abolished to help fund these changes. Additionally, £1.1 billion from a packaging levy will support councils, though this is not included in core spending power calculations. Funding allocations will consider waste management costs, deprivation, and rurality, with final amounts confirmed after consultations.

How To classify, account and track government spending on prevention

A new paper by DEMOS advocates for the institutionalisation of preventative departmental expenditure limits (PDEL) to shift government spending toward long-term impact. By building on existing frameworks in health and homelessness, PDEL aims to standardise preventative expenditure through collaboration across HM Treasury, NHS England, local authorities, and other agencies. Despite operational challenges, PDEL could track spending with unprecedented transparency, fostering a culture of mission-driven government. A proposed "Purple Book" would guide implementation, making prevention central to public service transformation.

UK’s electricity was cleanest ever in 2024

In 2024, the UK's electricity was the cleanest ever, with CO₂ emissions per unit falling by over two-thirds in a decade according to Carbon Brief. This improvement is due to the phase-out of coal and a significant increase in renewable energy generation, which more than doubled. Fossil fuels accounted for just 29% of electricity, while renewables reached a record 45%, and nuclear contributed 13%. Gas remained the largest single source of electricity at 28%, followed by wind at 26%. This shift to cleaner electricity has also enhanced the CO₂ savings of electric vehicles and heat pumps, making them significantly more environmentally friendly compared to traditional petrol cars and gas boilers. No regional breakdown was provided.

WMCA Economic Dashboard characterises a regional economy waiting for the spring

Both the regional business activity index and future activity index were down again slightly in December 2024. Claimant counts also rose in December. The evidence points to a regional economy that is waiting for a clear direction from both national and regional government. Find the full Economic Dashboard in the annex below.

Latest vacancy data highlights lack of labour in education sector

According to the Employment, Skills, Health & Communities Insights, the highest number of current vacancies is in the education sector and most vacancies looking to recruit people with level 3 (A-level) qualifications as a minimum.