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Time to get real on the Welsh Economy says IWA

Ambitions to close the wealth gap between Wales and England will remain elusive unless Ministers set out an ambitious plan for economic growth backed up by actions, a major new report for the IWA will say today.

Led by the widely respected economist Gerald Holtham an analysis by the independent think-tank’s Economy Group shows that Welsh economic performance has stabilised but has not been boosted by devolution.

“In 1999 the value of goods and services produced in Wales - the Gross Value Added or GVA figure - stood at 72.4% of the UK average. But by 2013 it was essentially unchanged at 72.2%. Economically, there is little evidence to demonstrate that devolution has had much effect on Wales” the report says.

Previous targets for closing the wealth gap to 90% of UK GDP per head were quietly dropped and not replaced with any clear ambitions.  The report says that growth policies of Welsh governments up to now have been on a scale implying acceptance of only modest narrowing of the gap with the rest of the UK, and have sometimes fallen down in implementation owing to a lack of commercial nous.

Missed opportunities’ have also stopped the Welsh economy getting more out of its larger businesses, say a group of leading academics from Manchester Business School, Queen Mary’s University London and FSB Wales, who have contributed to the report. They also point to the lack of medium-sized firms in Wales producing branded goods to provide a competitive niche.

IWA Economy Group Chair Gerald Holtham says in the report, “Rather than vague grumbling or vaguer aspirations, surely it is time for the country to take a clear-eyed look at how ambitious it wants to be for its economic future and what sort of changes would be required to achieve its ambitions. There is no point espousing unrealistic targets and no point in specifying any target whatsoever without a strategy that might achieve it”.

The cross-party think-tank says that for the Welsh economy to be on par with England’s, Wales needs a growth rate which matches that of Eastern Europe in the post-Soviet era. “True catch-up growth means the economy needs to add nearly  £1½ billion of activity, more than the turnover of an Admiral, every year” the report states. “That is not going to happen under the current strategy and a marked shift in approach would be needed to have any chance of it”.

IWA Director Lee Waters said: “Its time we got real. If we really want to close the wealth gap with England we need to marshal all available resources behind a detailed long-term plan. Growth can’t come without investment, and the IWA’s report sets out the need for borrowing to invest in big projects like the South Wales Metro and making Wales self-sufficient in renewable energy”.

Report author Gerald Holtham said: “Ultimately it is a political question for the people of Wales. Do we want to pursue modest sensible policies that will change our situation only very gradually? Or are we ready to venture something bolder with no certainty of success but some hope of making a faster change in Wales' circumstances?’

The report is being launched ahead of the IWA’s Annual Economy Conference on Monday 23rd March at the Wales Millennium Centre. The recommendations will be discussed by a range of speakers including Admiral CEO, Henry Engelhardt; Former Member of the Bank of England’s MPC, Marian Bell and Simon Gibson, Chief Executive, Wesley Clover Corporation.

Full Report: An Economic Strategy for Wales?

EDITOR’S NOTES:

•       The Institute of Welsh Affairs is an independent think tank and registered charity (no. 1078435) dedicated to making Wales better.

•       You can find out more information about the IWA by visiting our website HYPERLINK "http://www.iwa.org.uk/"www.iwa.org.uk

•       The report is available in full from the IWA.

For media enquiries please contact:

Lee Waters
lee.waters@iwa.org.uk 
Mob: 07764774650

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