Monday, 27 June 2011

No growth in Wales

Who ever coined the phrase that economics was the “dismal science” is hardly likely to have Wales in mind but the word dismal would be apt in describing Wales’s economic performance.

It’s ironic that whilst Wales has taken control of its own governance it’s economy seems to be out of control. The country has gone backwards economically since devolution.

In 1989 the GVA, previously known as GDP, of Wales was 84.3 per cent of the UK average of 100, England was 102.3, Scotland, 96.0 and bottom of the league Northern Ireland was 73.1 per cent. When Wales started the road to devolution the figure had slipped back to 77.3 per cent, as too had the Scots to 94.5 per cent with Northern Ireland overtaking Wales for the first time with 79.4.

After ten years of devolution the Scots have steamed ahead nearly on the UK figure of 100, with 98.8 per cent to be precise, Northern Ireland have maintained their position as have England. But Wales has slipped even further back and has a GVA of only 74,3 percent. Not only is Wales bottom of the nation league it is also bottom of the league when compared to the regions of England. If it were a football club Wales would have been relegated to a minor league.

Not an inspiring story, me thinks. It is an especially depressing story when account is taken of all the help the Welsh economy has had from Europe. From 2007 to 2013 Wales  either has received or will receive £2 billion from EU structural funds. Not an insignificant cash handout you'd agree. But where has all the money gone? Clearly, not spent on getting the economy up and running. It is has been used in various social engineering schemes. Worthy, but is it using this money wisely and to good effect?

Just to depress you further, dear reader, things are about to get worse. 

Our lack of entrepreneurship has made us over dependent on the public sector for jobs. Cuts in this area will be 10 per cent in real terms over the next four years. This is likely to hit the Welsh economy particularly hard, as the proportion of the workforce employed in the sector is greater than most elsewhere in the UK.

If you’re a youngster in Wales your job prospects are bleak. They make up just under half of the 115,000 people of working age unemployed in Wales, despite being just a sixth of the total working age population.

Why has Scotland, and to a lesser extend Northern Ireland succeeded, when Wales has failed. Undoubtedly Scotland has succeeded because it has a greater control over fiscal matters and is likely to even have more such powers shortly. Wales in the form of Carwyn Jones seems reluctant to go down that particular road.

Scotland has Scottish Enterprise a quango that encourages economic development. Wales decided to scrap the WDA. Maybe Wales would have been better employed culling its badgers rather than its quangos.

Well, now the ball is in Edwina Hart’s court. It’s now up to her as the relevant minister to reverse the economic decline. European Funds have to be used to encourage enterprise. Wales needs to be a can do Nation. Control of Corporation tax and Income tax could help create such a culture. For that she needs to lobby the First Minister to give her the fiscal tools to do the job. Unless these things happen Wales will continue to be a basket case economy.


  1. There is a slight problem,Edwina Hart neither likes nor trusts the entrepreneur, is she in her present role fit for purpose I wonder.

  2. John Broughton27 June 2011 at 16:54

    There is no hope of an "enterprise economy" in Wales while Edwina Hart is in charge. I hate to think how much more of a car crash our economy would be if Hart were also in charge of income and corporation taxes.

    Given the equally dismal performance in health and education the logical conclusion is that devolution has been a total disaster for Wales.

  3. I notice that the figures you give for Wales are only relative i.e. a percentage of the UK average.

    What are Wales' growth figures in absolute terms?

    The Welsh economy could actually have grown throughout the period but because the English and Scottish economies grew at a faster rate (a deceptive rate of growth fuelled by a banking sector boom and subsequent taxpayer bailout) Wales looks worse by comparison.

    What we really need to look at is how much has the Welsh economy grown since devolution, and in what sectors that growth has occurred. On a related point we should consider how many jobs of created and how much of the wealth generated has been retained within Welsh communities.

  4. Ah well, at least we still have the language.