Could an independent Wales go it alone? | Business| Economy and finance news from a German perspective | DW | 09.08.2019
  1. Inhalt
  2. Navigation
  3. Weitere Inhalte
  4. Metanavigation
  5. Suche
  6. Choose from 30 Languages
Advertisement

Business

Could an independent Wales go it alone?

Wales is not too poor to be an independent nation. The ex-first minister of Wales believes so anyway, though others are less sure. So, how would Wales fare economically if it had to go it alone in a post-Brexit world?

"Brexit will be an unmitigated disaster for the Welsh economy," Jeff Williams-Jones, a lecturer at Bangor Business School in north Wales, says. It is hard to disagree.

The small nation of around 3 million has more sheep than people and sells many of the animals to Europe, mostly transported via England. It is also the UK's largest recipient of EU funds and its crumbling heavy industry in the south of the principality would not likely survive any Brexit-induced shocks very well or for very long.

Despite all that, Wales voted by over 52% in favor or leaving the EU in the 2016 referendum.

The devolved Welsh government has said it will continue to campaign for the UK to remain in the EU, but with the prospect of a no-deal Brexit approaching, public attention is turning to the question of whether Wales should consider independence from a post-Brexit UK.

"We could stand alone," Carwyn Jones, former first minister of Wales, said. "But the question is whether we should. I believe not. We are a partnership of four nations," he went on.

A majority of the Welsh voted for Brexit in 2016 as a way of giving David Cameron, the ex-prime minister, a bloody nose and sticking two fingers up at globalization, Jones believes. "It was more about Westminster than Brussels," he told DW.

Wales' problem is that it spends more than it raises and has no track record of borrowing, Jones went on. "We export 60% of our products to the EU single market, but most of that is to England," Jones said, adding that Wales could simply become independent by default. "If Scotland goes and Northern Ireland decides to join a united Ireland, England and Wales alone would not work and maybe the English would leave us."

"I am extremely pessimistic and see [UK prime minister, Boris] Johnson trying to repaint [his predecessor, Theresa] May's deal, but falling short, as she did, over the Irish backstop."

Wales would lose its EU grants and suffer from a very hard landing, Jones added.

Watch video 01:07

Job losses as Ford closes Bridgend plant in the UK

Indy-curious

In June 2016, 52.5% of people in Wales voted to leave the EU. But concerns over Brexit negotiations have risen since then and recent polls suggest that support for "Remain" has risen strongly in Wales.

Some 36% support it, with a further 17% #indycurious, according to a recent YouGov poll. Support for #indyWales has increased by 7% since 2017 and for the first time makes up over 50%.

Welsh First Minister Mark Drakeford has stated that "support for the union is not unconditional."

"Just singing 'Rule Britannia' and waving the Union Jack would not be enough to preserve the UK," he adds.

A free Wales?

Opponents argue that Wales is too small and too poor to stand alone.

"We still need to develop an emotional tug in the context of where we are, but we would probably struggle with its economic dimension," according to Laura McCallister, professor of public policy at the University of Cardiff. "Evidence from Scotland underlines that the argument about independence isn't just the economy," she told DW.

The devolved assembly has been making laws for Wales since 1999, including abolishing prescription charges and giving financial support to Welsh university students, via tuition loans and living cost grants. Wales was also among the first to introduce free bus travel for old-age pensioners..

Williams-Jones says campaigners needed to make the economic case "on evidence, not emotion."

"We are not too poor to be independent, no," he said, but warned if the country did go it alone, the economy would not be "transformed overnight," pointing to the early years of economic transition in Ireland before it thrived.

Watch video 03:55

Welsh sheep farmers at odds over Brexit

A basket case?

In 2017-18, according to Government Expenditure and Revenue Wales 2019 data, estimated GDP in Wales was 70.6 billion pounds (€84 billion, $94 billion), making the Welsh economy the tenth-largest of the UK's twelve regions, ahead of only Northern Ireland and the North East of England.

Wales is also the biggest recipient of EU funds in the UK, mainly in the form of structural funding. Wales also has the second-lowest average pay growth of anywhere in the UK and this has worsened since 2007-2009. Economic output per head has been lower in Wales than in most other parts of the UK and of Western Europe for a long time.

"This is a pretty damning indictment of the scale of regional economic imbalances throughout Britain," Stephen Clarke, a senior economic analyst with the Resolution Foundation think tank, says.

Capital spending per person in Wales was 4.8% lower than the UK average, according to analysis by Cardiff University's Wales Governance Centre.

Spending on transport, science and technology has been particularly low.

Tax weak

The research for the Wales Fiscal Analysis project, studying Office for National Statistics (ONS) data, shows public spending in Wales was 14.7 billion pounds more than the total amount of taxes collected in 2016, whereas this year the gap was 13.7 billion pounds.

The narrowing of that gap is not because people in Wales are earning more and paying more taxes, but because public spending has declined and is 10% lower than in 2009-10.

"While these results are based on ONS estimates, there is no escaping the fact that historic factors have led to the Welsh economy and tax base being far weaker than that of the UK as a whole," said Ed Gareth Poole, academic lead of the Wales Fiscal Analysis project.

McCallister said 20% of all taxes collected in Wales will soon be raised by the assembly in Cardiff, but added that there is no sign yet that the UK government is prepared to compensate the poorest parts of its territory adequately for the loss of EU funds.

"So unless the Welsh economy has some rapid, dramatic and unlikely revival, there's no doubt at all that the money coming in is going to be a lot scarcer," she said.

Watch video 02:20

Boris Johnson finds little support among UK leaders

DW recommends

Audios and videos on the topic