Confidence among private businesses in the West Midlands is 'exceptionally strong', KPMG enterprise barometer reveals

Earlier this year KPMG unveiled its first Private Enterprise Barometer, an annual survey capturing the perspectives of 1,500 privately owned businesses, including 133 in the West Midlands, from across various industries. 

Following a challenging six months of economic headwinds, KPMG has revisited businesses to understand how developments in the first half of 2025 may have influenced their outlook. Earlier this year, 95 per cent of private businesses in the West Midlands expressed confidence in their growth prospects for the next 12 months. By the mid-year mark, this sentiment has fallen slightly, to 94 per cent, reflecting a marginal change in outlook regarding their growth ambitions. 

Technology continued to dominate as a leading investment priority for West Midlands-based businesses, with two thirds (66 per cent) identifying areas such as artificial intelligence (AI), cyber security and broader digital transformation as key focuses. While the region trails behind London and the North East’s overall commitment to technology investment (74 per cent), it demonstrates a clear and persistent ambition to remain at the forefront of digital innovation. 

Diversification is also high on the agenda for private businesses across the West Midlands. A growing number of firms (80 per cent) are looking to introduce new service lines and expand their client offering. Meanwhile, two thirds (64 per cent) are targeting entry into new markets. Both figures show increases (from 65 per cent and 61 per cent, respectively) at the start of 2025. 

When it comes to external challenges, inflation remains the most pressing concern, cited by two-fifths (41 per cent) of respondents. This is followed by interest rates, which more than a third (37 per cent) of business leaders flagged as a key risk. 

The appetite for alternative funding options is also gaining momentum, with two in five (42 per cent) of the region’s private businesses now open to private equity investment. This growing interest reflects a broader willingness among firms to explore new sources of capital in support of innovation, growth and long-term resilience. 

Andy Bostock, Birmingham office senior partner at KPMG UK, said: "Confidence among the West Midlands’ private businesses remains exceptionally strong at the mid-year point, with 94 per cent of leaders optimistic about growth prospects for the year ahead. From Birmingham’s thriving professional services sector to the wider region’s world-class manufacturing and automotive industries, firms are investing heavily in technology, including AI, cyber security and digital transformation, to diversify their products and services and enhance competitiveness. 

"Businesses are seizing opportunities to enter new markets and expand their offerings, supported by a growing interest in private equity as a means of unlocking future growth. While inflation and interest rates remain key concerns, the West Midlands’ track record of innovation, adaptability and sectoral strength puts it in a strong position to play a leading role in the UK’s economic recovery and growth.” 

Nationally, the mid-year check-in saw a rise in confidence, with 93 per cent of respondents confident in their growth prospects for the months ahead. Earlier this year, 92 per cent were confident of their firm’s growth prospects in the next 12 months. 

Business priorities remained the same, with tech, skills and innovation still dominant. However, there was a slight dip in interest when it came to the areas of ESG [environmental, social and governance] and sustainability.

Looking ahead, private businesses highlighted a range of areas they see as key to helping build planned growth in the upcoming autumn budget. These included the faster adoption of new technology and subsequent investment in research and development, fresh measures to help with business profitability, support to help nurture skills and talent and a continued focus on a renewed industrial strategy. 

Euan West, head of KPMG private enterprise in the UK and EMA, said: “2025 has been filled with many challenges at home and abroad for firms of all shapes and sizes. 

“Private businesses have continued to show resilience and adaptability in the face of these challenges, which is reflected in their steady levels of confidence about the future.  

“The results of this survey show the UK is seen as a stable environment for business, providing a strong launch pad for future growth, but there are still challenges, particularly when it comes to ongoing inflation conditions. 

“All eyes will now fall on the autumn budget to see if the concerns of private businesses are addressed.”