West Midlands businesses remain confident as they target tech investment in H2 – report

Nearly nine in 10 (89 per cent) private business owners in the West Midlands are confident in delivering growth in the second half of 2026, according to KPMG.

At the start of 2026, KPMG's annual Private Enterprise Barometer surveyed 1,500 privately owned businesses across the UK, including 125 in the West Midlands, spanning sectors such as professional services, financial services, technology, industrial manufacturing and retail, to understand their growth ambitions and priorities for the year ahead.

Six months on, following a challenging period for the UK and global economy amid instability in global energy markets, persistent inflation and trade restrictions, KPMG returned to these same businesses to understand how changing economic conditions have influenced their outlook.

At the beginning of the year, 90 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 held steady, dropping just one percentage point to 89 per cent, reflecting stable expectations for growth during the remainder of the year.

That confidence is translating into investment. Technology continues to dominate as a leading investment priority for West Midlands-based businesses, with over three-quarters (76 per cent) identifying areas such as artificial intelligence (AI), cyber security and broader digital transformation as key focuses.

This is 10 percentage points above the UK average and represents a significant, 41-percentage point increase from 35 per cent at the beginning of the year, signalling a dramatic shift towards long-term productivity and innovation in the region.

Diversification also remains firmly on the agenda, with 70 per cent of businesses looking to expand their operations overseas. This is in line with the beginning of the year (70 per cent) and nine points above the national average (61 per cent).

Of businesses considering how to fund their growth plans, appetite for private equity investment has increased slightly compared to the beginning of the year, with almost half (47 per cent) of respondents identifying private equity as a way to fund their growth ambitions – just above the UK average of 45 per cent and up five points compared with 42 per cent six months ago.

Meanwhile, two-thirds (66 per cent) of businesses are turning to their own balance sheets to help fund their growth plans, reflecting a growing preference to retain control and rely on internal resources amid ongoing economic uncertainty. 

Businesses in the West Midlands identified inflation and ongoing cost pressures as the two biggest short-term risks facing their organisations. At the same time, firms are looking to policymakers to help strengthen long-term resilience. When asked about the Autumn Budget, almost half (48 per cent) of West Midlands firms would like to see technology adoption and digital capability prioritised by the incoming Chancellor.

Looking further ahead, the wider economic picture remains front of mind, 57 per cent of respondents pointed to the UK’s economic outlook and productivity growth as the biggest external factor shaping decisions around investment, growth and exit planning.

Andy Bostock (pictured), Birmingham office senior partner at KPMG UK, said: “Amid an overall national dip in confidence, it’s encouraging to see the positive outlook of West Midlands firms holding steady.

“This feels like even more of an achievement when considering the challenging start they had to 2026, with geopolitical developments and trade disruption affecting daily operations, supply and even profitability.

“We know that West Midlands firms are resilient, but these results make it even clearer. They have distinct and thought-out plans to pursue specific lines of growth, like technology investment and international expansion.

“Building on established strengths across a huge range of sectors, like advanced manufacturing, financial services and technology, there’s no doubt that West Midlands businesses can continue to pursue growth, there just needs to be the external investment to match this ambition.”

Nationally, private businesses outlined plans to continue to invest in technology and skills as part of efforts to boost growth after KPMG UK’s mid-year Private Enterprise Barometer revealed a dip in growth confidence due to ongoing UK and global uncertainty.

The survey found that 80 per cent of business owners were confident in their firm’s growth prospects, down from 87 per cent when asked earlier this year.