The new State of the Region 2026 report from the West Midlands Combined Authority (WMCA) reveals the two faces of the West Midlands. One depicts a region stabilised after a turbulent period and beginning to strengthen in key parts of the economy. The other shows deep inequalities are hardening and pose the central risk to future economic growth. In short, the report repeatedly stresses that the conditions for growth are improving, but the benefits are not yet spreading widely or quickly enough.
The report says economic growth has recovered to pre-pandemic levels, with the region continuing to attract high levels of business-funded R&D (Research and Development). At the same time, the number of high-growth firms has increased faster than in comparable city-regions. However, long-term sickness and poor health have become a central economic challenge: economic inactivity due to poor health remains well above national levels. Child poverty and housing insecurity have worsened, with over a third of children living in poverty across the WMCA area – rising to 62% in Birmingham, Ladywood.
Two-sided inequalities
Educational inequalities remain entrenched, and parts of the Black Country have yet to see meaningful improvement in living standards. “These trends risk locking the region into a cycle where economic growth continues but too many residents are unable to participate or benefit from it”, warns the report. It notes that the West Midlands has one of the youngest and most diverse populations in England, giving it a long-term talent advantage, but requires targeted intervention to tackle persistent inequalities. Educational attainment is below national averages at some stages – especially for disadvantaged, SEND (Special Educational Needs and or Disabilities) and some ethnic minority pupils. NEET (Not in Education, Employment or Training) levels are higher than nationally.
Productivity is lower than in comparable regions. High-growth firms outstripped other city regions, but foreign direct investment has fallen. The West Midlands housing market is highly unequal, with median house prices ranging from £200,000 in Sandwell to £329,000 in Solihull. Transport connectivity is also improving, but gaps remain. Digital connectivity is high (94% coverage) with the region leading England in 5G coverage. Environmental pressures persist with falling preventable mortality, declining air pollution mortality, and static adult physical activity levels.
The WMCA says: “The region’s story is one of youthfulness, diversity, innovation, and globally recognised industrial strengths – but with clear inequalities, across ethnicity, gender, disability, and locality.”
Future growth
Details in the report add that the West Midlands’ identity remains a key strength: residents highlight people as what makes the region special. However, the desire to remain living locally is lower than the national average.
Looking forward, the WMCA is pinning its hopes on the West Midlands Growth Plan, approved in 2025, which promises a “more deliberate and socially purposeful model of economic growth measured not only by how fast or aggressive it is but also by how well it is created and shared across the whole population and place, and by the social and environmental outcomes it realises for our people.”
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