Borussia Dortmund have confirmed the signing of Jude Bellingham from Birmingham City and said the 17-year-old has “enormous potential” and will go straight into their first-team squad next season.

The English midfielder has joined for a fee which could rise to €25m (£22.5m), having become Birmingham’s youngest player and goalscorer last season when he established himself as a first-team regular in the Championship.

The English teenager did meet with Manchester United but has followed the lead of players such as Jadon Sancho and decided to take a chance to continue his development in the Bundesliga.

Michael Zorc, Dortmund’s sporting director, said: “Jude Bellingham has decided with absolute confidence to pursue his career at Borussia Dortmund. The primary motivation behind his decision were the prospects on the pitch we were able to offer him.

“He has enormous potential, which we will continue to develop together with him over the coming years. He already boasts astonishing quality with and without the ball, and has a strong mentality to boot. Jude will immediately strengthen our first team squad, but we will certainly give him all the time he needs to adapt to the higher level of play.”

Bellingham, who had been in Birmingham’s youth system since he was seven years old, made his first-team debut last August aged 16 years and 38 days and became the club’s youngest goalscorer at 16 days and 63 days, eclipsing two records held by Trevor Francis. He has represented England in several age categories, most recently with the under-17s.

“I can’t thank Birmingham City enough for what they have done for me – not just this season, but since the age of seven,” said Bellingham who played in Saturday’s 2-0 defeat at Preston, his 43rd appearance of the season. “Of course, I wish everyone associated with the club nothing but the best. Once a blue, always a blue. However, I’m incredibly excited to have joined one of the biggest clubs in Europe.”