Tuesday, 27 November 2012

No growth, so lets cut the cash

Duw, it’s bad and likely to get worst. No, not the weather, or perhaps that too. No its the economy.  Not my view although it’s been a constant theme in this blog for some time. But its now the view of none other than the Organisation for Economic Co-operation and Development (OECD).
This leading economic think tank says that Britain’s economy will shrink less than was thought this year. Good news indeed, but it was followed by the bad news that recovery would be slow and uncertain against a worsening international backdrop.
Their reasons for pessimism, a global slowdown, a crisis in the eurozone, the government's deficit reduction programme and the paying down of consumer debt.  All were acting as a brake on growth.
To get things moving the OECD said it would back the Chancellor  if the weakness of the economy forced him to slow down his debt-reduction plans.
The reason that the OECD are quietly urging Osborne to ease back on its programme of cuts is that despite low wage increases and part-time working limiting job losses, they are concerned about the high level of youth unemployment and “this could worsen if the economy faltered.”  
Unemployment is forecast to rise to 8.3% in 2013, against a backdrop of 0.9% growth. 
So where does this prognosis leave Wales. The simple answer, not in a good place. As one of the poorer regions of the UK with some of the highest rates of unemployment.  The country desperately needs a growth programme. 
This is why it’s strange that the Conservative Opposition in the Assembly want to see serious cuts to the funds Wales gets from Europe. 
In the words of Andrew RT Davies Tory leader in the Assembly it’s “only right and reasonable that savings be made.” His reason, Wales is still poor after receiving two tranches of European money.  So that clearly points to the money being wasted. His answer to cut the next tranche that comes from Europe. 
But without the cash Wales has received from Europe the economy would be in an even worse state. Where would our rural areas be without CAP. The structure funds have helped with various infrastructure projects and have helped the economy. The fact that Wales is still poor is an indication that more needs to be done, not less.
That is why Carwyn Jones  was right to warn the British Irish Council meeting yesterday that "leaving the EU would be an unmitigated disaster.
We would lose our access to structural funding as well as access to the European market. When I travel abroad to attract foreign direct investment to Wales, what brings people here is not the three million population of Wales, or even indeed the 60 million population of the UK - which is tiny when you compare it the size of India or China.
"No, the reason why people come here is the access to the European market. Anything that interferes with that access to the European market is not in our interests."
If the OECD forecast is right, Wales needs all the help it can get in the next few years. Cutting the European funds to Wales at a time of recession will harm the economy not help it.


  1. More nonsense about structural funding. Perhaps the First Minister should ask himself how much more Wales would get via the Barnett formula if a future UK Labour government had an extra £4 billion to spend each year. The so called 'regeneration industry'might not be happy but most Welsh taxpayers would be. On the CAP Gareth ,of course we should oppose reform. Where would the rum producers of Martinique be without their 1 million euro subsidy?How would St Louis sugar in France survive without its 144 million euro subsidy? Even Amsterdam's Schipol airport gets a subsidy of about 100,000 euros.Let's also not forget the 786 million euros given to Europe's cotton farmers.As the Fair Trade Foundation points out this depresses the global price of cotton and has a negative effect on the livelihood of farmers in places such as West Africa.Perhaps we should also be asking how did agriculture in New Zealand survive after the ending of all agricultural subsidies in the 1980s? Again as is the case with structural funds many economists would argue that the UK economy would benefit if farming subsidy policy was returned to the control of UK government.

  2. "So that clearly points to the money being wasted." Maybe questions should be asked of Labour in Wales about how they would better use any future European funding. If they hadn't wasted so much leaving our economy in the doldrums, and could show some progress, then maybe arguments against the Tories in Wales would be stronger.