Devolution has created a strange set of affairs when it comes to perceptions on the state of Welsh economy, event within the same political party.
For example, the First Minister said last week that the Welsh economy is "moving forward pretty well". Yet his colleague, the Shadow Secretary of State for Wales claimed recently that 90,000 of the 100,000 new Welsh jobs created involved zero-hours contracts and pay a weekly average of £300 less than full-time jobs.
Certainly both can’t be right, can they? And given such a clear difference in opinion on the state of the Welsh economy, what is the real picture? This is one of the questions that the Institute of Welsh Affairs (IWA) has attempted to answer last week via its report “An Economic Strategy for Wales?” report. With its claim that “the Welsh were either content with their relative position or did not believe there was anything to be done about it”, it suggests that there has been little progress since devolution in 1999.
And despite providing some potential solutions as to how to boost the Welsh economy going forward, its ‘half empty approach tends to dwells too much on the mistakes of the last decade rather than telling the story of where we are today. In fact, instead of the doom and gloom reported, the statistics correspond with Carwyn Jones’ view and shows that Wales has actually experienced a remarkable turnaround in its economic fortunes since the recession.
If we examine official statistics since 1999, we see that the Welsh economy grew by 9.5 per cent placing it fourth behind London, the West Midlands and the South East of England in the prosperity league table for that period and, if we assume recent growth rates for each regimon of the UK, is set to overtake both Northern Ireland and the North East of England in the next three years in terms of GVA/head (see below).
More relevantly, it showed the largest change in economic growth of any UK region including London and the South East of England. So why has this happened? Certainly, the UK Coalition Government’s policies since 2010 have encouraged greater enterprise in the economy, something that was ignored in the IWA report. Indeed, this success is reflected in the explosion in the number of start-ups in recent times especially in Wales where the percentage of new business births in the Welsh economy grew by 41 per cent during the period 2012-13, the highest of any region of the UK.
But it is not only in enterprise where there are encouraging figures, with Welsh businesses spending £369 million on research and development in 2013, up 37 per cent on the previous year and the largest increase of any UK region.
In addition, Cardiff University is now one of the top five research universities in the UK, a fantastic achievement that could be the bedrock for considerable commercialisation in the future.
The revitalised efforts of the Welsh Government has led to some of the best inward investment figures for years and it is in this environment that we have industries that were once written off, such as manufacturing, making a comeback. Indeed, it is hard to believe that whilst 70,000 jobs were lost in manufacturing in Wales between 1999 and 2010, there has since been a growth of 16,000 new jobs in this sector since then.
And the faith in Welsh workers was demonstrated yet again this week when Ford in Bridgend was given the green light to build the company's new generation of petrol engines from 2018.
The IWA report was also fairly negative around the performance of mid-sized firms in Wales but even in this much-maligned part of the economy, employment growth in percentage terms over the period 2010-14 has actually been higher (7.3 per cent) than for the UK as a whole (6.3 per cent). In fact, this should not be too surprising, given fantastic success of mid-sized firms such as Village Bakery, Smart Solutions and Afonwen Laundry, which have grown to become major employers and multi-million pound turnover businesses in just a few years.
After years of neglect, rail electrification is coming to South Wales (which will hopefully be replicated quickly across the North Wales line) and Airbus in Broughton remains the largest manufacturing plant in the UK.
We are seeing the beginning of what could be a global energy industry starting in Swansea Bay, Cardiff is slowly but quietly attracting serious financial services investment and in Newport, Sir Terry Mathews’ Alacrity Foundation is in the process of creating the next generation of disruptive technology firms.
And yes, we may soon have the UK’s first regional development bank to support small firms to grow further.
Of course Wales could do better, as could any part of the British economy.
For example, we continue to have the lowest proportion of exporters in the UK and if we are to improve the productivity of this nation, then skills development has to be at the top of the agenda, especially in addressing the needs of growing businesses.
Whilst support for rail upgrading is to be welcomed, we need to be doing more to obtain other vital infrastructure investment from the UK Government. Certainly it is great news that £17 million has been awarded to a new semiconductor development in Cardiff although more needs to be done to persuade the next UK Government to ensure Wales gets a more equitable share of research and innovation funding.
Therefore, we still need to continue to boost enterprise across the nation, support our businesses to grow and ensure that they more innovative and internationalised, regardless of their size. We also need to maximise the opportunities to build up the high level skills and modern infrastructure that can really transform modern economies.
If we can do that and more, then there is little doubt that the Welsh economy will continue its recent renaissance for years to come.
For example, the First Minister said last week that the Welsh economy is "moving forward pretty well". Yet his colleague, the Shadow Secretary of State for Wales claimed recently that 90,000 of the 100,000 new Welsh jobs created involved zero-hours contracts and pay a weekly average of £300 less than full-time jobs.
Certainly both can’t be right, can they? And given such a clear difference in opinion on the state of the Welsh economy, what is the real picture? This is one of the questions that the Institute of Welsh Affairs (IWA) has attempted to answer last week via its report “An Economic Strategy for Wales?” report. With its claim that “the Welsh were either content with their relative position or did not believe there was anything to be done about it”, it suggests that there has been little progress since devolution in 1999.
And despite providing some potential solutions as to how to boost the Welsh economy going forward, its ‘half empty approach tends to dwells too much on the mistakes of the last decade rather than telling the story of where we are today. In fact, instead of the doom and gloom reported, the statistics correspond with Carwyn Jones’ view and shows that Wales has actually experienced a remarkable turnaround in its economic fortunes since the recession.
If we examine official statistics since 1999, we see that the Welsh economy grew by 9.5 per cent placing it fourth behind London, the West Midlands and the South East of England in the prosperity league table for that period and, if we assume recent growth rates for each regimon of the UK, is set to overtake both Northern Ireland and the North East of England in the next three years in terms of GVA/head (see below).
More relevantly, it showed the largest change in economic growth of any UK region including London and the South East of England. So why has this happened? Certainly, the UK Coalition Government’s policies since 2010 have encouraged greater enterprise in the economy, something that was ignored in the IWA report. Indeed, this success is reflected in the explosion in the number of start-ups in recent times especially in Wales where the percentage of new business births in the Welsh economy grew by 41 per cent during the period 2012-13, the highest of any region of the UK.
But it is not only in enterprise where there are encouraging figures, with Welsh businesses spending £369 million on research and development in 2013, up 37 per cent on the previous year and the largest increase of any UK region.
In addition, Cardiff University is now one of the top five research universities in the UK, a fantastic achievement that could be the bedrock for considerable commercialisation in the future.
The revitalised efforts of the Welsh Government has led to some of the best inward investment figures for years and it is in this environment that we have industries that were once written off, such as manufacturing, making a comeback. Indeed, it is hard to believe that whilst 70,000 jobs were lost in manufacturing in Wales between 1999 and 2010, there has since been a growth of 16,000 new jobs in this sector since then.
And the faith in Welsh workers was demonstrated yet again this week when Ford in Bridgend was given the green light to build the company's new generation of petrol engines from 2018.
The IWA report was also fairly negative around the performance of mid-sized firms in Wales but even in this much-maligned part of the economy, employment growth in percentage terms over the period 2010-14 has actually been higher (7.3 per cent) than for the UK as a whole (6.3 per cent). In fact, this should not be too surprising, given fantastic success of mid-sized firms such as Village Bakery, Smart Solutions and Afonwen Laundry, which have grown to become major employers and multi-million pound turnover businesses in just a few years.
After years of neglect, rail electrification is coming to South Wales (which will hopefully be replicated quickly across the North Wales line) and Airbus in Broughton remains the largest manufacturing plant in the UK.
We are seeing the beginning of what could be a global energy industry starting in Swansea Bay, Cardiff is slowly but quietly attracting serious financial services investment and in Newport, Sir Terry Mathews’ Alacrity Foundation is in the process of creating the next generation of disruptive technology firms.
And yes, we may soon have the UK’s first regional development bank to support small firms to grow further.
Of course Wales could do better, as could any part of the British economy.
For example, we continue to have the lowest proportion of exporters in the UK and if we are to improve the productivity of this nation, then skills development has to be at the top of the agenda, especially in addressing the needs of growing businesses.
Whilst support for rail upgrading is to be welcomed, we need to be doing more to obtain other vital infrastructure investment from the UK Government. Certainly it is great news that £17 million has been awarded to a new semiconductor development in Cardiff although more needs to be done to persuade the next UK Government to ensure Wales gets a more equitable share of research and innovation funding.
Therefore, we still need to continue to boost enterprise across the nation, support our businesses to grow and ensure that they more innovative and internationalised, regardless of their size. We also need to maximise the opportunities to build up the high level skills and modern infrastructure that can really transform modern economies.
If we can do that and more, then there is little doubt that the Welsh economy will continue its recent renaissance for years to come.