Green shoots point to a region with strong economic fundamentals

Economic performance in the West Midlands was stronger at the end of 2025 than at any time in the past 19 months, according to the latest NatWest regional growth tracker released this week. 

In November 2025 the growth index was 51.4, rising to 52.9 in December 2025. This growth was driven by new orders, which expanded at their fastest pace since May 2023.

Local firms are confident about 2026, with business confidence the most ‘upbeat’ since last May, the report said. 

Companies are reporting an increase in consumer demand with the rise of new clients and gains from marketing initiatives.

Reasons for optimism across the region

Lisa Phillips, of NatWest, said: “West Midlands companies cheered a substantial improvement in demand for their goods and services as 2025 came to an end, an encouraging outcome when compared to exactly one year ago. 

“The marked upturn in new orders raised spirits regarding growth prospects.”

West Midlands fastest growing region outside London

Despite the increase in sales, the regional labour market remains bleak, with the ONS last month reporting an unemployment rate of 6% in the West Midlands versus a national rate of 5.1%. 

Sebastian Burnside, NatWest chief economist, added: “The jobs market faced multiple headwinds in 2025. While we saw a surge in activity, December saw a broad-based decrease in employment as firms generally faced an increase in cost pressures.

“High fuel and transportation costs have forced businesses to protect themselves by dismissing staff. However, the West Midlands is the second fastest growing region in the UK behind London. There is the belief that, after a longer period of economic stability, the workforce will eventually return to job growth and an increase of recruitment in 2026.”