Where Is Wales’ Position In The New Global Economy?

 The Boardroom  Comments Off
Apr 092012
 

Technological change and globalisation represents fundamental challenges for individuals, firms and policy makers in Wales, which is why individuals need to develop and continuously upgrade their skills, while firms need to radically change the organisation of their operations within and across the boundaries of nation states.

Recent global economic turbulence means that decision-makers now have to look at wider economic policies that have to take account of fundamentally altered global markets, while structural microeconomic policies – which affect the competitiveness of indigenous firms – are gaining increasing importance.

We need to develop a new knowledge-based economy in Wales, and our policies must address a wide spectrum of issues such as intangible assets, knowledge infrastructures and flows, and intellectual property rights. At the same time there is a need for coherence between wider macroeconomic policy, as well as among the components of narrower economic policy.

We need to take a fresh look at our traditional sectors – primary resources, manufacturing, and construction – and judge afresh their importance in our economy relative to the service sector.

We need to renew our efforts to open foreign markets for Welsh goods and services, country-by-country and region-by-region, by concentrating on market access issues and developing strategies to overcome obstacles faced by Welsh businesses.

Wales has much to offer in terms of its culture and products, and we need a shop window to display them to the world. We have to communicate our unique selling points to targeted customers, whether they be investors, visitors, or overseas customers.

And we need to find out how far our industrial structure is becoming increasingly knowledge-based and technology-intensive, with competitive advantage being rooted in innovation and ideas – the foundations of the new economy. Industrial structural change is continuing to occur in parallel with increases in knowledge intensity. Our economy is moving up the knowledge intensity scale.

The Welsh Government needs to examine the extent and nature of changes in the global industrial structure and Wales’ place in this by addressing four policy-related questions:

  • What has been the extent of structural change in the economy? Which industries have experienced growth? Which industries have not?
  • Has the pace of structural change been accelerating?
  • Is the Welsh economy becoming more innovative? Is it increasing its use of knowledge, technology, skills, etc.?
  • What are the key factors driving this structural change: final domestic demand, exports, imports, or technical change?

Structural change in the manufacturing sector needs to occur in parallel with changes in technological intensity, in the skill intensity of output, and in wage levels. High-technology industries in the Welsh manufacturing sector – those which spend a high proportion of their resources on research and development (R&D) – need to experience a higher growth rate than the sectoral average.

While in the past domestic demand was the dominant factor influencing the growth of our industries, international trade needs to become much more important. High-knowledge industries in the tradable sector need to benefit the most from export performance: low-knowledge industries have traditionally seen their relative decline hastened by import competition, and this is a trend we need to reverse going forward.

Exports will become an increasingly important factor for change in high-technology manufacturing industries. Rising imports have contributed to the loss of output share in low-technology industries.

For the service sector, the domestic market remains predominant. This is a reflection of the fact that services are not traded to the same extent as goods. Within the manufacturing sector, high-wage industries are generally export-orientated, and this is what we need to aspire to.

 Posted by Russell Lawson at 9:11 pm  Tagged with:

How Wales needs to bank on international growth

 The Boardroom, trade  Comments Off
Apr 022012
 

The Welsh Government to explore the possibility of setting up an Export-Import Bank to boost international trade, and look at similar Banks which exist in India, China and the United States and what lessons can be learned.

For example, the Export-Import Bank of Washington was created in 1934 as part of a larger economic policy promoting government spending to facilitate economic growth. Created during the Great Depression, the bank was conceived to help resolve problems of high unemployment, low income, low demand for goods and services, and slowed industrial production. This context seems a remarkably similar one today.

Active engagement in global trade has become one of the key factors in the growth of firms and the prosperity of countries. This is true not only in the case of major trading nations, but also, and perhaps even more so, with respect to developing countries like India.

Liberalisation of the foreign trade sector has been a cornerstone of the reforms of the Indian economy, with the result that the country’s share in global trade has been rising in recent years, as also the contribution of the foreign trade sector to the overall Indian economy.

The buoyancy in India’s services sector, with the country ranking amongst the top ten global exporters, would serve to further corroborate India’s emerging place in the global comity of trading nations.

Export-Import Bank of India – or Exim Bank – was set up in 1982 as an apex financial institution to finance, facilitate and promote India’s international trade, and has constantly strived to contribute towards India’s globalisation efforts.

With strong business fundamentals, and in line with the increasingly competitive global trading environment, the Bank proactively seeks to enhance the competitive edge of Indian companies through a comprehensive range of financing programmes and advisory and support services which encompass all stages of the export business cycle.

Towards facilitating inclusive globalisation, the Bank is also involved in creating export capability in small and medium enterprises, grassroots business enterprises and agri-industries.

India’s project exports, commencing with a modest beginning in the early 1980s, have evolved over the years to exhibit expertise in a wide range of activities thereby reflecting technological maturity, industrial capabilities, and growing sophistication of Indian exports, and the Bank’s pioneering and pivotal role in this direction has served to catalyse such exports.

This is the same model that Wales should look to emulate, and we should be calling on the Welsh Government to take a detailed look at this issue.

The Government of India launched Exim with a mandate, not just to enhance exports from India, but to integrate the country’s foreign trade and investment with the overall economic growth. Since its inception, Exim Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment.

Commencing operations as a purveyor of export credit, like other Export Credit Agencies in the world, Exim Bank of India has, over the period, evolved into an institution that plays a major role in partnering Indian industries, particularly the Small and Medium Enterprises, in their globalisation efforts, through a wide range of products and services offered at all stages of the business cycle, starting from import of technology and export product development to export production, export marketing, pre-shipment and post-shipment and overseas investment.

With India increasingly emerging as a major global investor, the Bank’s endeavours in this direction can be assessed from the fact that as many as 176 Indian ventures set up by over 147 companies in 54 countries, in both industrial and developing as well as emerging economies, have been supported, with the Bank taking direct equity participation in select cases to enhance such ventures.

In the realm of trade financing, which is the primary area of activity of most Export Credit Agencies around the world, the Bank’s operative Lines of Credit (LOCs) of over 70 with credit commitment of US$ 2.3 billion covering more than 80 countries serve as effective market entry mechanisms especially for small and medium enterprises, and the Bank is seeking to expand geographical reach and volumes in this initiative.

With India amongst leading global services exporters, the Bank has played a pivotal and pioneering role in catalysing India’s software exports since the mid 1980s, while the Bank’s support to Indian engineering and consultancy services has added to the momentum in the significant growth in India’s overall services exports witnessed in recent years.

The growing domain expertise as also increasing technical sophistication of Exim Bank would, perhaps, be best reflected by the fact that the Bank, in its journey spanning a quarter century, has been partnering and sharing its experience with other developing and emerging economies in their efforts to set up similar institutions, fostering an era of South-South cooperation.

Challenges abound in the globalised trading environment, with increased focus on regional trade, and cooperation emerging as important drivers of growth.

The significant role of an Export-Import Bank in facilitating enhanced regional trade and  boosting co-operation in trade and investment, such as the Indian model, could serve to highlight the continuous evolution of Wales’ endeavours in meeting global challenges.

 Posted by Russell Lawson at 8:52 am  Tagged with:

Higher Education: Engaging with the true needs of business

 The Boardroom, training  Comments Off
Mar 272012
 

Here is an interesting statistic for us all to ponder in Higher Education in Wales – not least Pro-Vice Chancellors leading Enterprise activity or building regional partnerships and collaboration. It is that the estimated UK market for part-time ‘high level learning’ (degree level and above) is estimated to be in excess of £5 billion per annum – and – most alarmingly – that the HE sector across the whole of the UK only captures some £300 million of this spend on organisational training and development.

So, quite simply, in terms of organisational and strategic focus and intent, there would appear to be considerable potential for increased market penetration by Welsh universities with respect to workforce development and employer engagement.

At Cardiff Metropolitan University we are well aware of this opportunity and our Vice Chancellor’s Board have approved the creation of a new Centre for Work Based Learning (CWBL) that is certainly unique to South Wales and, probably, in its intent is unique as an entity across the whole of the Welsh HE sector. Our website has just gone live – go to www.cardiffmet.ac.uk/CWBL

The website highlights a range of CWBL services which we know will see us claiming more of that high level training and development market share – but – more importantly – see us engaging with anchor companies, supply chain companies, SMEs and private training providers in imparting knowledge and skills that will sustain and grow Welsh businesses by improving their bottom line and improving their organisational culture.

How will we do this? Specifically, it will be by offering a learner and employer focused series of solutions to training and development in private companies and public agencies in Wales.

For example, for too long Welsh and UK universities have offered up a ‘demand-led’ environment for higher level skills offering learning ‘products’ that have been increasingly viewed by industry as ‘not fit for purpose.’ At Cardiff Met we now offer a much wider range of learning interventions – from free to access ‘talking heads’ videos and supporting PDF material to capture employers and employers imagination, on to non-accredited ‘Master-classes’ on topics of current interest – like ‘Organisational Resilience’ with Andy McCann – the WRU sports psychologist and ‘Networking and Advanced Leadership techniques’ with Professor Andrew St. John – speechwriter and adviser to Sir Stuart Rose, former CEO of Marks and Spencer , through to our new ‘Know How’ accredited (usually 5 and 10 credit volumes at level 4 or 5) short courses on leadership and management, top team working, marketing, brand awareness, change and project management, financial management and, design-led innovation.

In addition to this, we plan to start working on ‘market-making’ partnerships with anchor companies across Wales, working closely with companies like Consult Capital on the design and delivery of bespoke training and development learning solutions that drive up business efficiency and organisational capacity.

We have for example, created a work based learning matrix which will allow employee learning in the workplace to be placed in negotiated work based learning projects and ‘levelled’ so that individuals can gain 5, 10, 20 or 40 credits for work that they carry out in training and development situations, unique to the needs of their companies. These ‘chunks’ of learning will be able to be accumulated and offered up in a portfolio of learning by individuals so that they can gain a Cardiff Met Continuing Education Award (at undergraduate level) or a Professional Development Award (at postgraduate level) and enable individuals to travel into exciting Foundation degrees or Masters degrees in Applied Practice, which further extend this work-based learning approach.

Why are we doing this? Quite simply because we are responding strongly to the Welsh Government demand that Welsh universities should see employer engagement as a strategic priority. Active leadership at our most senior level has enabled us to develop this response and workforce development is central to our university values and mission. In particular, we have set up a university Credit Committee, which will facilitate the quick and smooth levelling and accrediting of employers’ in-house training.

We have already carried this out with major training providers like Acorn and Stratum Learning and are in numerous discussions with other well-known training providers and individual anchor companies. We aim to make this accreditation service our unique selling point (USP). We do not want to compete and offer similar training packages to those already out in the marketplace. However, we do want to make a university learning experience much more accessible and achievable to the many thousands of Welsh people in work.

We have already started recruiting key Associates into CWBL – individuals who have a strong commercial acumen, who are dedicated to business development and have a capacity to build university work based learning systems and learning solutions that are attractive, flexible and responsive to business needs.

We hope that you hit our website. E-mail us, call us and get engaged with our new CWBL ‘brand.’ We aim to make CWBL industry in Wales ‘first portal’ for investment in training and development. We are all about collaboration and partnership and offer pro-active and sophisticated approaches to business development. We have no doubt our accreditation and training and development services will lead to ‘cross-selling’ opportunities into ‘knowledge transfer partnerships’ (KTPs) and new company ‘Spin-out’ activity. Basically, we are here to work with employers in collaborative ventures that build their people and build their businesses. Our innovative approaches to accreditation and learning in the workplace will underscore all of our work and, we feel sure, lead to greater business success and growth for companies of all sizes in Wales.

Log on to CWBL and engage with us! Help us define and lead the way for work based learning in Wales!

 Posted by Dr Peter Treadwell at 9:05 am  Tagged with:

Higher Education: Engaging with the true needs of business

 The Boardroom, training  Comments Off
Mar 272012
 

Here is an interesting statistic for us all to ponder in Higher Education in Wales – not least Pro-Vice Chancellors leading Enterprise activity or building regional partnerships and collaboration. It is that the estimated UK market for part-time ‘high level learning’ (degree level and above) is estimated to be in excess of £5 billion per annum – and – most alarmingly – that the HE sector across the whole of the UK only captures some £300 million of this spend on organisational training and development.

So, quite simply, in terms of organisational and strategic focus and intent, there would appear to be considerable potential for increased market penetration by Welsh universities with respect to workforce development and employer engagement.

At Cardiff Metropolitan University we are well aware of this opportunity and our Vice Chancellor’s Board have approved the creation of a new Centre for Work Based Learning (CWBL) that is certainly unique to South Wales and, probably, in its intent is unique as an entity across the whole of the Welsh HE sector. Our website has just gone live – go to www.cardiffmet.ac.uk/CWBL

The website highlights a range of CWBL services which we know will see us claiming more of that high level training and development market share – but – more importantly – see us engaging with anchor companies, supply chain companies, SMEs and private training providers in imparting knowledge and skills that will sustain and grow Welsh businesses by improving their bottom line and improving their organisational culture.

How will we do this? Specifically, it will be by offering a learner and employer focused series of solutions to training and development in private companies and public agencies in Wales.

For example, for too long Welsh and UK universities have offered up a ‘demand-led’ environment for higher level skills offering learning ‘products’ that have been increasingly viewed by industry as ‘not fit for purpose.’ At Cardiff Met we now offer a much wider range of learning interventions – from free to access ‘talking heads’ videos and supporting PDF material to capture employers and employers imagination, on to non-accredited ‘Master-classes’ on topics of current interest – like ‘Organisational Resilience’ with Andy McCann – the WRU sports psychologist and ‘Networking and Advanced Leadership techniques’ with Professor Andrew St. John – speechwriter and adviser to Sir Stuart Rose, former CEO of Marks and Spencer , through to our new ‘Know How’ accredited (usually 5 and 10 credit volumes at level 4 or 5) short courses on leadership and management, top team working, marketing, brand awareness, change and project management, financial management and, design-led innovation.

In addition to this, we plan to start working on ‘market-making’ partnerships with anchor companies across Wales, working closely with companies like Consult Capital on the design and delivery of bespoke training and development learning solutions that drive up business efficiency and organisational capacity.

We have for example, created a work based learning matrix which will allow employee learning in the workplace to be placed in negotiated work based learning projects and ‘levelled’ so that individuals can gain 5, 10, 20 or 40 credits for work that they carry out in training and development situations, unique to the needs of their companies. These ‘chunks’ of learning will be able to be accumulated and offered up in a portfolio of learning by individuals so that they can gain a Cardiff Met Continuing Education Award (at undergraduate level) or a Professional Development Award (at postgraduate level) and enable individuals to travel into exciting Foundation degrees or Masters degrees in Applied Practice, which further extend this work-based learning approach.

Why are we doing this? Quite simply because we are responding strongly to the Welsh Government demand that Welsh universities should see employer engagement as a strategic priority. Active leadership at our most senior level has enabled us to develop this response and workforce development is central to our university values and mission. In particular, we have set up a university Credit Committee, which will facilitate the quick and smooth levelling and accrediting of employers’ in-house training.

We have already carried this out with major training providers like Acorn and Stratum Learning and are in numerous discussions with other well-known training providers and individual anchor companies. We aim to make this accreditation service our unique selling point (USP). We do not want to compete and offer similar training packages to those already out in the marketplace. However, we do want to make a university learning experience much more accessible and achievable to the many thousands of Welsh people in work.

We have already started recruiting key Associates into CWBL – individuals who have a strong commercial acumen, who are dedicated to business development and have a capacity to build university work based learning systems and learning solutions that are attractive, flexible and responsive to business needs.

We hope that you hit our website. E-mail us, call us and get engaged with our new CWBL ‘brand.’ We aim to make CWBL industry in Wales ‘first portal’ for investment in training and development. We are all about collaboration and partnership and offer pro-active and sophisticated approaches to business development. We have no doubt our accreditation and training and development services will lead to ‘cross-selling’ opportunities into ‘knowledge transfer partnerships’ (KTPs) and new company ‘Spin-out’ activity. Basically, we are here to work with employers in collaborative ventures that build their people and build their businesses. Our innovative approaches to accreditation and learning in the workplace will underscore all of our work and, we feel sure, lead to greater business success and growth for companies of all sizes in Wales.

Log on to CWBL and engage with us! Help us define and lead the way for work based learning in Wales!

 Posted by Dr Peter Treadwell at 9:05 am  Tagged with:

The importance of trading globally

 The Boardroom, trade  Comments Off
Mar 202012
 

The importance of exporting in these economically fragile times is in danger of becoming a cliche, but for a small country such as Wales it is also more important than ever before.

As a country we need to quickly develop an International Trade Strategy to concentrate on increasing the number of Welsh companies that trade on a global level while also providing encouragement, advice and the know-how to existing exporting companies for them to be able to extend their activities.

We need, as a matter of urgency, to create the right structures to pursue Wales’ exporting ambitions and needed to adopt effective and practical structures to pursue a grand vision and challenging objectives.

In a nutshell, Wales needs to develop and diversify our products in international markets; give a special emphasis on the needs of small and medium size enterprises (SMEs); enhance the image and competitiveness of our products and services in world markets; and reinforce Wales’ image as an open market and a good business partner.

We need to increase the prosperity of the people of Wales by creating a change in the culture of the Welsh business community thereby opening new opportunities in the global market. However, we feel that a deeper business culture change is needed that would include a change in the outlook of governments and their policy, together with a change in the attitudes of government implementation bodies.

A change in outlook would include revisiting Wales’s education system; entrepreneurial development policies; public sector grants; planning policy; as well as better targeting of European Structural Funds.

Developing the export component of businesses must be consistent with present attempts to revise and improve business support services, and must also be linked to the strategy of generating more business start-ups in Wales.

The WIBC will assist this cultural change in businesses by proactively demonstrating the benefits of overseas trade, while assisting them to develop an export capability and increase their interaction in overseas markets. It is a matter of encouraging involvement and assisting success.

We feel that we must recognise the importance and potential of small and medium size businesses in increasing Wales’s exporting activity and hope that this realisation will be translated in services provided by any new international trade strategy. While it will on occasions be natural to give attention to the most successful exporting businesses, we should be cautious not lose sight of the contribution made by the sum total of all individual exporting businesses.

Specialised and high value services need to be offered by an International Trade Strategy in order to help, promote and give credence to the image of the country as being a major force in the world market. The services such a strategy needs to cover should be wide-ranging and include, to name a few, the provision of:

  • International trade contacts
  • Business information to industries, services and markets
  • Special advisors to small and medium enterprises
  • Specialist product magazines, catalogues and directives to target overseas customers
  • Trade promotions and trade fair events
  • Promoting Wales’ image and maintaining a favourable overseas trading environment
  • Creating a global network of influential businesses that support Wales

The strategy needs to be ambitious in its outlook while also remaining realistic. While it is correct to work for an improvement in our performance compared with the rest of the UK, the strategy also needs to take account of the difficulties faced with this objective if the global downturn continues or gets worse. In such circumstances the strategy must investigate credible options of ensuring that Wales’ export share continues to expand and that Wales’ export performance improves in relation to the rest of the UK.

Appropriate measures should be aimed at enabling Welsh companies to export. We should, therefore, aim to provide the services that are required that would allow companies to develop that capacity. It’s essential to provide services that are customer-led rather than providing services that would merely justify the existence of the provider.

As a body serving the public, the Welsh Government must include performance and activity indicators to ensure that it is achieving its objectives. The strategy should decide on the best mechanism to ensure that customers (i.e. SMEs) are satisfied with the services and quality of advice and assistance offered. It is important that we strive to improve Wales’s overseas trade performance as a whole, while also ensuring that businesses in every region within Wales are in step with the improvements.

Despite the grim economic outlook in Europe, consumer and industrial demand in emerging markets, such as Brazil and Indonesia, is healthy and poised for sustained growth. Technology and falling trade barriers have made the conduct of international business simpler, less costly, and less risky than ever. There have never been fewer barriers to success in the global marketplace.

Wales should stand to benefit from these trends in the global economy. Those businesses that export abroad tend to win. Evidence shows that firms engaged in international trade and investment are more productive and innovative than their purely domestic counterparts. Yet only a small percentage of Welsh companies are making the leap. The number of firms selling in foreign markets has levelled off in recent years, and exports remain at a low percentage of our Gross Domestic Product.

While many things determine overall export performance, one important factor that has kept Welsh companies from seeking more sales in foreign markets is the size and attractiveness of the UK home market. Most of our companies never think of foreign markets and do not realise that foreign sales opportunities are now well within reach.

Changing business attitudes on trade will require a new focus on promotion. We must encourage more Welsh companies to begin exporting. And companies already exporting to only one or two countries should be encouraged to consider additional markets.

Achieving such a goal calls for putting public-private partnership should be at the heart of the government’s outreach to the business community. Our partners in the private sector and in state and local governments can reach the thousands of Welsh companies – large and small – that have the potential for greater foreign sales, including the ranks of very small companies that make up a growing share of all exporting firms.

 Posted by Byron Davies at 10:59 am  Tagged with:

Dragging the Welsh economy into the big league

 The Boardroom  Comments Off
Mar 142012
 

The Welsh Government needs to set a new direction for the Welsh economy in order to attain the status and characteristics of a ‘Premier League’ developed country within the next 20 years.

The key facets of this vision should be economic dynamism, a high quality of life, and a strong national identity.

Strategies for the long term, which would also produce some benefits for Wales in the short to medium term, should be directed at maintaining and extending the nation’s international competitiveness.

When change is so rapid and dynamic as in the international economic environment, the very planning process is fraught with risks. Very few predicted the global financial crisis or the degree of impact this would have on the world economy now and in the future.

Wales cannot hope to predict such dramatic events at home or abroad. But through scenarios and contingency plans our new direction should take into account various contributory factors, and weigh up other more gradual shifts and trends in international politics, trade and economics.

With clear lessons from the recent past of the world economy and Wales’ experience, the writing on the wall for the next ten years and beyond is that economic strategies for Wales need to evolve from the past single dimensional type to a multi-dimensional one in order to remain viable in an increasingly complex environment.

In this context, the Welsh Government needs to develop an economic plan which would: provide an overview of the economic landscape over the next 20 years; define a clear vision for the economy and analyse its implications; initiate a national planning process, which is consultative and evolutionary in character; and help build a shared vision among labour, business and government on national economic aspirations.

Despite the long horizon, Wales must take steps now to seriously and vigorously pursue the goal of becoming a first division developed country for two reasons. First, some of the strategies, like enhancing manpower, requires a long lead time of one generation or more. Second, it provides the best possible assurance against being overtaken by other emerging countries which, if it happened, could lead to economic stagnation or decline.

In order to grow at relatively high rates, it is necessary to reorganise the way human and physical resources are managed.

The basic issue which underlies Wales’ efforts to become a developed country economically is the issue of international competitiveness.

On what basis can Wales hope to compete with higher-performing export-led countries? The answer can only lie in improving and upgrading to a level comparable to what these countries have today in key areas. And so long as Wales remains an open economy, the assessment of what factors are important is essentially one that is judged by companies themselves.

Wales needs to understand where the developed countries are on key parameters, and to move towards where they are. However, it must be recognised that, given our size, there are some things that are beyond our capabilities. Basic research, for example, is one area where a country needs economies of scale and a large pool of interdisciplinary talent.

But, as in Switzerland’s case, there are several niche areas in which it has specialised and earned a top developed country’s standard of living. Wales needs to identify and cultivate the right kind of niches and within these niches, move as close to the level of top developed countries as it is possible to achieve.

The single most important factor towards achieving developed country status is enhancing Wales’ most important resource, its people. They should therefore be equipped with: a high standard of competence; a high level of basic education; a high degree of industry relevance in training programmes; effective programmes for mid-career training; and nurturing important human resource qualities, such as the work ethic and creativity.

Wales has spent the last 15 years investing heavily in physical infrastructure, but emphasis now needs to be placed on soft infrastructure which consists of technological infrastructure, comprising a pool of trained manpower in key technologies as well as a network of technical competence centres and research institutes which enable companies to be effective in design and innovation, along with a social climate and institutional structure which supports innovation and a national system which encourages a high degree of co-operation among labour, business and government.

 Posted by Russell Lawson at 3:42 pm  Tagged with: ,

How do we know Wales isn’t in recession?

 Recession, recovery, The Boardroom  Comments Off
Dec 012011
 

Croeso i Gymru?

THE better-than-expected third quarter Gross Domestic Product (GDP) figures released last month may have provided some small crumbs of comfort for the UK economy, but in Wales we remain in the dark over the economic picture on our side of Offa’s Dyke.

GDP is calculated on a quarterly basis at UK level.  It’s a measure which has many critics.  It is a blunt measure and it does not take into account the domestic economy (“free” work in the home or for the family), the underground economy, environmental degradation, insecurity or internal inequalities.  Furthermore, since GDP is a measure of production it does not tell us who gets the profits.

That said, GDP is undeniably a highly influential economic barometer.  It decides whether an economy is in recession or not.

There are plenty of people calling for alternative economic measures which can show a population’s wellbeing, sustainable development and progress towards equality and I would support them.  They may be unsubtle, but for the time being, GDP figures are important.

Welsh GDP figures are published, but not on a quarterly basis and very out-of-date.  The latest GDP figures for Wales, which are calculated by the statistical office of the European Union, are done on an annual basis and are three years’ old by the time they are released.  Therefore, in February of this year GDP figures for Wales were released relating to 2008.  This is not acceptable to Plaid Cymru, which is why we have called for the figures to be made available at the same time as the UK figures, as they are in Scotland. While the Welsh Government stubbornly adheres to its preference for the Gross Value Added (GVA) indicator (which does not take into account taxes on products or any subsidies going in), it is nigh on impossible to show whether or not Welsh independence is “unaffordable” as many claim.

But more importantly in the short term is the fact that we cannot tell whether Wales is in a recession or whether we were ever been lifted out of recession since the implosion of the money markets in 2008.  Given that our GVA and GDP figures are produced annually, it is impossible to officially state that Wales has ever been in recession, given that two or more consecutive quarters of negative growth are needed to come to such a conclusion.

An experienced business leader recently told me in a private conversation that he was convinced that Wales is in recession right now.  He may indeed be right, but with our current reliance on annual GVA figures, no-one knows.  There are strong suspicions that the UK is not officially in recession because the economy of London and the south east of England is out-performing every other part of the UK and that these historically affluent areas are masking the economic woes of the rest.

For the propped up, tax-payer-bailed-out banking sector which is concentrated in the London area, it has been business as usual since the 2008 financial meltdown with high wages and bonuses, but not when it comes to lending to small to medium sized businesses.  The near-freeze on borrowing to small businesses has had a huge impact on Wales where their significance, particularly in the manufacturing sector, is comparatively large.  If the suspicions are correct that London and South East has just about dragged the UK as a whole out of recession, it does not bode well for everywhere else including Wales.  Without up-to-date GDP figures, economic policies cannot be tailored to those areas which now could be helped by a stimulus package.

Higher than average unemployment rates and numbers of welfare claimants, coupled with low numbers of job vacancies, point to the need for an urgent attention.  Welsh GDP figures produced on a quarterly basis would give clarity as to the true economic picture here as well as providing an imperative for greater proactivity.  Plaid Cymru’s calls for powers over tax and other economic levers would garner wider support if it could be demonstrated just how badly Wales fares by being so closely aligned with and dependent on UK fiscal policy.  Why should Wales be treated as an economic region akin to the North East of England or the West Midlands when it comes to economic performance, and not as a country in its own right with its own primary law-making legislature? Our national status deserves to be reflected in our economic indicators.

The omission of GDP figures for Wales also leaves a gaping hole in the Welsh Government’s knowledge of its own business community.  Small businesses below the turnover limit of £73,000 do not have to register for VAT.  These small businesses slip under the radar of the Welsh Government who are not informed of their existence (even though HMRC is aware it is not required to not share that information with the Welsh Government).  This means that the Welsh Government knows nothing about an estimated one third of all businesses in Wales which fall below the VAT registration threshold.

Wales is its own country, with its own unique economic challenges.  Not only do we need the tools to deal with the challenging economic circumstances we face, but we also need the data which will give us an up-to-date picture as to exactly where we are.  Without this knowledge we will be constantly playing catch-up and that, surely, is not in the interests of anyone concerned with Wales and its future.

 Posted by Leanne Wood AM at 11:00 am

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