The State of Britain

WALES

Welsh exports increase with Germany the country’s largest market, the construction sector dips and Anglesey and the Western Isles import the least services in the UK

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HMRC has published the latest regional trade figures which show exports and imports for 2019. Given the time period this data reflects Brexit uncertainty rather than Covid 19 turmoil. 

In the year to December 2019, the overall value of UK trade in goods exports increased by 2.1% to £346bn compared with the same period in 2018. The overall value of imports increased by 0.3% to £483bn.

There was an increase in the annual export value in Wales along with five of the 12 UK ‘regions’. Welsh exports increased by 3% or £516m to £17.7bn which was 5% of the UK total.  The increase took Wales above Yorkshire & The Humber to ninth in the UK rankings.

The leading regional exporter remained the SE at £46bn with Northern Ireland the smallest at £9bn. The best performer in percentage terms was London which was up by 17.2% with Yorkshire & The Humber falling by 6.3%.

There was a decrease in the annual import value in Wales along with five of the 12 UK ‘regions’. Welsh imports fell by 1.3% or 233m to £18bn which was 4% of the UK total.

The biggest regional importer was the SE at £98bn and Northern Ireland was the smallest at £8bn. In percentage terms London added 12% to imports compared with Scotland which reduced imports by 7%.

Germany was Wales’s largest export market with machinery & transport equipment the best export. Most of Wales’s imported goods came from the USA with machinery and transport equipment the biggest import.

Services

This month the ONS published data on regional services imports for 2017. The biggest component of services imported into the UK was £51bn of travel. This was 28% of the £181bn UK total imports of services.

Wales imported £5bn of services value in 2017 of which £2bn was travel. The leading importer of services was London at £60bn with Northern Ireland importing £1.6bn.

At a local level, the largest importer of non-travel services into the UK was Camden and City of London at £14.5bn, almost double the next largest importer which was Westminster at £7.9bn. Of the 167 local areas, the Western Isles of Scotland imported the least amount, £21m, with Anglesey next at £31m.

In Wales, Cardiff and Vale of Glamorgan imported £556m of non-travel services compared with Anglesey.

The data on services exports was released by the ONS last year which showed Wales exported £8bn of services. London exported the most services at £117bn which compared with Northern Ireland at £2.9bn.

Other data

The ONS has also published the latest regional construction sector data to December 2019 which again reflects Brexit uncertainty rather than Covid 19 turmoil. Compared with the previous quarter all parts of the UK recorded a decline with Wales posting a 4.5% drop to £1.7bn. The biggest decrease in the UK was 4.6% in the West Midlands; the SE was best with a 0.9% fall.

More pre-pandemic data from the ONS showed unemployment in the country was 10,000 higher at 56,000 between December and February; the uplift of 0.7% was the biggest in the UK and took the rate to 3.7%. Northern Ireland had the lowest rate of 2.5% with the NE the highest at 5.6%, with the UK rate at 4%.

The South East had the highest employment rate at 80.1% which compared with 74% in Wales where 1.5m are employed; the UK rate was 76.6%.

Welsh average property prices increased the most in the UK over the month by 1.2% to £164,435. The uplift took the annual increase to 3.4%, the highest in the UK. In comparison, UK prices dropped by 0.6% to £230,332 during February, an annual growth rate of 1.1%.

The wealthiest area of Wales was Sketty in Swansea, the poorest was east Cardiff, all of the country’s economic regions record productivity below the UK average

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The ONS has published average household disposal income estimates for England and Wales in 2018. The incomes shown are after tax and housing costs are taken off.  The analysis has shown that 87% of local areas had an average household income of between £22,500 and £39,200; within this over a third were between £28,000 and £33,600.

Of the 50 areas with the highest total incomes, 41 were in London with the lowest incomes more widely spread geographically across England and Wales. The North East, East England, London, and the South East had no local areas in the bottom 50.

The wealthiest area in England and Wales was Mickleover in Derby with incomes of £52,200 and the poorest was Highfield North in Leicester at £12,500. The two areas are 30 miles from each other and ranked 7200 places apart.

The wealthiest area of Wales was Sketty in Swansea with £39,600. This ranked the area 203rd out of the 7,201 areas recorded. The poorest part of the country were areas of eastern Cardiff with £13,900. This area was ranked 7,195 out of the 7,201 areas of the UK recorded.

Like most regions of the UK, output per hour in Wales is below the UK average. Productivity per hour in the country was 17% below the UK average which ranked the country bottom nationally for 2018. One reason for this is the high levels of hours worked and high productivity in London and South East which pulls up the UK average so much that all other regions fall below it.

The ONS has now released data for a longer period and at a subregional level. This gives further insight into the Welsh performance.

Perhaps the most useful is the 2018 results for the 44 enterprise regions in the UK which comprise the 38 English local enterprise partnerships (LEPs) and six enterprise regions in Scotland, Wales and the border regions.

Thames Valley Berkshire LEP had the best productivity (in terms of hours and jobs) in 2018 at 35% above the UK average whereas the Black Country LEP at 24% below was the worst.

Unsurprisingly all three of the country’s economic regions recorded productivity below the UK average. South East Wales was the best and was ranked 22nd at 10% below, North Wales and Mid and South West Wales were ranked 41st and 42nd at c13% below. Only Cornwall and the Black Country LEPs were ranked lower.

In terms of productivity growth between 2010 and 2018 the Coventry and Warwickshire LEP was top with growth of 16%. Twelve economic regions recorded productivity levels lower in 2018 than 2010. The worst performer was the Buckinghamshire Thames Valley LEP which saw productivity drop by 11%.

The country’s results for productivity growth were more mixed. With growth of 5% South East Wales was the eleventh best in the UK and Mid and South West Wales ranked 16th nationally with growth of 3%. But North Wales recorded productivity levels lower in 2018 than 2010; at -4% the region was ranked 40th.

The country’s two subregions recorded productivity below the UK average with East Wales 14% below and West Wales and The Valleys -20%.

At county level, all Wales’s economic regions recorded productivity below the UK average, the only part of the UK to do so. Cardiff and the Vale of Glamorgan was the best at -4% with Powys the lowest in the UK at -43% below the UK average.

The growth in hours worked between 2010 and 2018 in East Wales was 14%, beating West Wales and The Valleys which recorded 8%. The level of growth in East Wales ranked eleventh in the UK’s 40 subregions.

If the increase in economic output is also factored in then the sub regional performances are reasonable. West Wales and The Valleys was ranked 16th in the UK with growth of 4% and East Wales was placed 27th with 2%.

More data from the ONS showed unemployment in the country was 3,000 lower at 51,000 between November and January; the 0.2% drop took the overall rate to 3.3%. Northern Ireland had the lowest rate of 2.4%, the NE the highest at 6.2%, with the UK rate at 3.9%.

The South East had the highest employment rate at 80% which compared with 74.4% in Wales where 1.5m are employed; the UK rate was 76.5%.

The Welsh average property price fell by 2.9%, the biggest drop in the UK, to £161,719, which took the annual increase to 2.0%. In comparison, UK prices decreased by 1.1% to £231,185 during January, an annual growth rate of 1.3%.

Welsh growth slows and the country drifts down the rankings, productivity contracts and is the worst in the UK but Welsh unemployment at a record low

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For the 12 months ended December 2019, a nowcast published by the Economic Statistic Centre of Excellence (‘ESCoE’) on a rolling 4 quarter basis, has estimated that Welsh growth has fallen from 1.3% to 0.8%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the country tenth (previous ranking sixth) and suggests the Welsh economy has not performed well relative to the other eleven parts of the UK. Over the same period UK growth was 1.4%; growth in London (ranked first) was 3.3%; and growth in the East Midlands (ranked twelfth) was 0.1%.

The latest official ONS figures for an earlier period are more mixed. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its third estimate for the nine English regions and Wales. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

These stats are for the period six months before the ESCoE estimates shown above and compare GDP in the quarter ended June 2019 with the same quarter a year earlier. These more volatile figures highlighted that Wales grew by 0.7%, down from 2.6% growth the previous quarter. This placed the country fifth (previous ranking third) out of the twelve UK ‘regions.’

London topped the table with growth of 4.5% whilst UK growth over the same period was 1.4%. The NW was the worst performer and contracted by 0.7%, one of three ‘regions’ in the UK to suffer a decline.

In the same report, the ONS’s figures highlighted that the standalone quarter to June 2019 was better for Wales than the previous quarter. The Welsh economy grew by 0.4% in April to June 2019, following a contraction of 0.6% in January to March 2019.

This placed the country fourth (previous ranking twelfth) out of the twelve UK ‘regions’. Six regions of the UK saw their economies contract as did the UK overall by 0.2%. The WM was the worst performer in Q2 with -1.6% whereas London was the best with +1%.

In this period, Welsh transportation/storage grew by 78.6% but manufacturing and human health/social work fell by 4.3% and 3.3% respectively.

Overall the agriculture and services sectors grew by 3.8% and 2.0% respectively, while the construction and production sectors fell by 6.7% and 3.0%. The agriculture and services sectors have seen steady growth relative to 2017, whilst construction has dipped since Q4 2018 and the production sector has fallen since late 2017.

Productivity

Like most regions of the UK, output per hour in Wales was below the UK average. Productivity in the country was 17.2% under the norm which ranked the ‘region’ last in the UK.

Two regions had productivity above the UK average in 2018, London +31.6% and the South East +9.1%. These regions record high levels of hours worked and their elevated productivity pulls up the UK average so much that all other regions fall below it.

Wales was also last in terms of output per job. The country’s 18.2% below the UK average compared with London at 40.5% above.

In terms of growth in output per hour, six regions of the UK expanded. Wales was ranked tenth as output per hour contracted by 1.0%. At 2.3% growth was fastest in Scotland and the biggest contraction was in Yorkshire and the Humber at 2.5%. UK growth was 0.5%.

Sectorally, productivity in accommodation/service activities was better than expected but non-manufacturing and agriculture disappointed.

On average, in 2018 the UK economy produced about £35 of value for each hour worked, with finance and insurance top at c£69 per hour compared with accommodation and service activities productivity at c£17 per hour.

Labour

More data from the ONS showed unemployment in Wales fell by a big 14,000 to 45,000 between October and December; the drop of 0.9% moved the overall rate down to a record low of 2.9%. Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.8%. The highest rate was 6.1% which was recorded in the North East.

The South West still had the highest employment rate at 80.1% which compared with 74.4% or 1.5m in employment in Wales; the UK rate was 76.5%.

In December, average earnings in the country increased by £39 to £566 per week. London had the highest average earnings of £805 and the lowest average earnings of £530 were recorded in the NE. Wales was ranked tenth (previous ranking twelfth).

In the UK overall, average earnings grew by 2.9% or by 1.4% after inflation. After adjusting for inflation, regular pay is now at its highest level since 2000, whereas total pay (which includes bonuses) is still 3.7% below its peak in February 2008.

Housing

Welsh average property price fell by 2% over the month to £165,735; the drop took the annual increase to 2.2%. In comparison, UK prices increased by 0.3% to £234,742 during September, an annual growth rate of 2.2%.

A big drop in the Welsh jobless rate, a significant uplift in house prices and losses continue to mount up at Cardiff airport

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In the ONS’s estimate of regional public spending and regional tax revenues in 2019, Wales had a deficit of £13.4bn, a smaller shortfall than the £14.2bn recorded in 2018. This compared with London, which had the highest surplus of £38.9bn.

On a per person basis, the Welsh deficit was £4,289, lower than the £4,552 recorded in 2018. London had the highest surplus of £4,369 per person whereas Northern Ireland had the biggest shortfall at £4,978.

The only areas of the UK to run surpluses were London, the SE of England and the East of England. The West Midlands and the North East were the two regions in the UK to increase their net fiscal deficits over the year; the other seven regions reduced their shortfalls.

At a national level, the UK had a deficit of £623 per person which splits into deficits of £68, £2,713, £4,289 and £4,978 for England, Scotland, Wales and Northern Ireland respectively.

Public spending in Wales was £43bn or £13,698 per head, an increase on the 2018 figure of £42.4bn. London had the biggest spend of £123.9bn or £13,826 per head whereas Northern Ireland had the lowest at £27.9bn or £14,821 per head. Total government spending was £853bn or £12,835 per head.

Wales collected £29.5bn in taxes in 2019. London contributed the most to the Exchequer at £161.9bn, compared with the lowest contribution of £18.5bn which was from Northern Ireland. Overall the state raised £811.3bn or £12,213 per head in taxes, an uplift of £34.1bn or £461 per head compared with 2018.

More data from the ONS showed unemployment in Wales fell by 18,000 to 46,000 between September and November 2019; the whopping decrease of 1.2%, the biggest drop in the UK, took the overall rate to 3.0%. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%.

The South West had the highest employment rate at 79.8% which compared with 74.9% in Wales. UK employment was estimated at 76.3%.

Welsh average property prices increased by a huge 3.5% during November 2019, the uplift to £172,574, increased annual growth to make it a UK outlier of 7.8%. In comparison, UK prices increased by 0.4% to £235,298 an annual growth rate of 2.2%.

On transport, a Welsh Government spokesman has said state owned Cardiff Airport adds c£250m GVA to the Welsh economy and sustains around 2,400 aviation related jobs.

Last year a new tax payer loan was announced bringing the total amount of cash the airport can borrow from the Welsh Government to £59.4m. Most of the original loan of £38.2 has already been drawn down according to officials, which suggests the new £21.2m blurs the line between investment and working capital. 

Its latest accounts show the airport made a pre-tax loss of £18.5m in 2018/19 and barely recorded a positive EBITDA figure. Welsh ministers paid another £52m in 2013 to buy the airport.

At c£80m of public money already deployed to keep the airport operating, and with a further £21m now at risk, the economic case looks increasingly thin.

On jobs, a new buyer has not been found for Bangor based The Book People and administrators PwC say 155 people have been made redundant. The business was founded in 1998 and employed 393 people last month. The firm has offices in Bangor and Godalming, Surrey. PwC said 82 of the 142 staff at the Bangor office have lost their jobs.

Increased digitalisation has put 26 jobs at the Molson Coors call centre at risk. The brewer, which owns brands including Carling, Worthington, Sharp’s and Cobra, employs 132 people at Cardiff Gate Business Park.

And in Deeside, Flintshire, packaging firm Mondi has announced plans to close its factory in the second half of 2020; 167 staff are affected. The plant creates bags, pouches and laminates for the consumer industry.

Also Liberty Steel is cutting 72 staff in Newport, with a further 282 jobs going in south Yorkshire. The announcement follows Tata Steel’s plans to shut its Orb plant, near to Liberty Steel, in September 2020, putting up to 380 jobs at risk.

Last November, Tata announced plans to cut 3,000 jobs across Europe of which c1,000 could be in Wales. Tata Steel’s pre-tax losses were £371m last year, up from £222m in 2017-18.

Wales records above average growth in 2018, Monmouthshire and Newport the best for Welsh growth, three areas of Wales in the UK bottom ten for GDP per head; more recent data highlights the country’s strong property market

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Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its 2018 full year estimate of economic activity by UK country, region and local area using gross domestic product.

The figures showed the Welsh economy grew by c1.3% in 2018, similar to the 2017 growth rate. This placed Wales fifth (2017 ranking tenth) out of the twelve UK ‘regions.’

The UK and England growth rate in 2018 was 1.4%. Scotland grew by 0.9% and the Northern Ireland economy shrank by 0.5%.

Within the country, the Monmouthshire and Newport economy grew the fastest at 5.2%, followed by Bridgend and Neath at 4.5% and Anglesey at 4.0%. Across the UK, the highest annual growth of the 179 local areas was in Falkirk at 10.5%.

Three areas of Wales saw their GDP decline in 2018. The Central Valleys recorded the biggest drop at 4.0%, followed by Powys at 1.3% and South West Wales at 0.7%. In UK terms, the lowest annual growth of subnational areas was in Mid and East Antrim at -10.1%.

GDP per head growth of 4.2% to £28,821 was seen in Monmouthshire and Newport although at £31,824 Cardiff and Glamorgan were top. GDP per head fell by 4.4% in the Central Valleys to £17,950 but despite a growth rate of 3.8% Anglesey was bottom in Wales with £17,781.

In terms of UK extremes, GDP per head in Camden and the City of London was £395,309 and £15,034 in Ards and North Down. Three areas of Wales were in the UK bottom ten; Anglesey was 176th out of 179 despite the good growth rate of 3.8%. These figures are a guide and are influenced by commuter flows.

In 2018, key drivers of the Welsh economy were mining and quarrying up 6.1%, administrative support services 5.3% and transportation and storage up 3.9%. Those areas that did not perform well were education down by 3.3%, arts/entertainment declined by 2.3% and information and communication down 0.8%. Overall the services and manufacturing sectors grew by 1.5% and construction grew by 1.1%.

The 2018 performance of the country’s three economic areas was also highlighted by the ONS. Of the UK’s 45 development bodies or economic regions (the Welsh Development Agency was abolished in 2006), Greater Birmingham and Solihull LEP was ranked 1st in the UK with growth of 2.8%. The North Wales Economic Region moved up the rankings from 35th to 7th with growth of 2.2% whilst the South East Wales Economic Region was static at 21st. The Mid and South West Wales Economic Region moved up 16 places to 27th with growth of only 0.8%.

More data from the ONS showed unemployment in Wales dropped by 4,000 to 55,000 between August and October 2019; the drop of 0.2% took the overall rate to 3.6%. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%. The highest rate was 6.1% which was recorded in the North East.

The South West had the highest employment rate at 80.8% which compared with 74.3% in Wales. The UK rate was 76.2%.

UK property prices grew in only three parts of the country. Growth of 0.7% in Wales during October 2019 took prices to £166,245, an annual uplift of 3.3%, the biggest hike in Britain. In comparison, UK prices fell by 0.7% to £232,944, an annual growth rate of 0.7%.

The Welsh economy ranked third in the UK despite contracting by 0.5% in Q1, pay in Wales is the lowest in the UK, and a big monthly drop in house prices

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On economic development, Aston Martin launched the DBX sport utility vehicle, its first Wales-made car. The firm’s first full-size five-seater will cost £158,000. The St Athan plant employs 300 workers, which could rise to 750 staff when fully operational, and has the capacity to produce 4,000 DBX vehicles a year.

The factory could also build the firm’s new electric Lagonda and RapidE cars, although these will be produced on a much smaller scale.

The Welsh Government pledged £18.8m in grants to attract the firm with taxpayers also on the hook for a 30-year guarantee to Aston Martin that would see public money cover the rent of the factory should the firm leave.

The value of the guarantee has not been disclosed. Earlier this year, Aston Martin announced it was borrowing £116.7m in high yield debt.

Also on cars, Ineos is building a manufacturing and assembly plant for its new 4×4 vehicle and plans to begin production in Bridgend in 2021. It is expected to initially create around 200 jobs to make the Grenadier, and up to 500 roles in the long-term.

It is not known how much taxpayers will stump up but the firm is planning to invest £600m in the new car, inspired by the original Land Rover Defender, which went out of production in 2016.

Tata Steel announced it expects to cut 1,000 jobs across the UK as part of its restructuring plans. Two thirds of the losses will be management and office-based roles, but jobs in Wales could be at risk.

The Stats

Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its next estimates for Wales and the nine English regions, for the year to March 2019. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

The latest figures showed the Welsh economy grew by 2.6% compared with 1.8% in the year ended December 2018. This ranked the ‘region’ third (previously fifth) out of the twelve UK ‘regions’.

London topped the table with growth of 4.2% with Yorkshire and The Humber bottom at -0.3%. Propelled by a drive to meet the original March 31st Brexit date, UK growth over the same period was 2.2%.

The ONS figures, however, also showed that the Welsh economy, along with the East Midlands and Yorkshire and the Humber, contracted in the quarter to March 2019. The contraction was 0.5% in January to March 2019, following growth of 0.4% in October to December 2018.

In this period, manufacturing grew by 1.6% and health grew by 1.0%, with wholesale and retail trade growing by 0.9%.  The transportation and storage industry output fell by 17.6% and the information and communication industry fell by 4.5%.

Overall, the production sector was the main driver of GDP within Wales with the services sector a major drag on the economy.

Estimates published by ESCoE last month for the year ended September 2019, a more recent period than the ONS figures, ranked Wales sixth (pervious ranking eighth) with growth of 1.31%, which suggests the country has had a better summer than winter.

Using this metric, UK growth was 1.45%. Growth in London (ranked first) during this period was 2.32% compared with growth in the South West of England (bottom) at 0.41%

More data from the ONS showed that unemployment decreased by 2,000 to 59,000 between July and September; the decrease of 0.1% took the overall rate to 3.8%. Northern Ireland had the lowest rate of 2.5%, with the UK rate also at 3.8%. The highest rate was 5.9% which was recorded in the North East.

The South West had the highest employment rate at 81.0% which compared with 73.9% in Wales; the UK rate was 76.0%.

In September, average earnings in Wales were down by £55 to £527 per week, the lowest in the UK. London had the highest average earnings of £830. In the UK overall, average earnings grew by 3.6% or by 1.8% after inflation.

Welsh average property prices fell by 2.8% (the biggest drop in the UK) over the month to £164,433 which took the annual uplift to 2.6%. In comparison, UK prices fell by 0.2% to £234,370 during September, an annual growth rate of 1.3%.

Planning permission for Wylfa Newydd nuclear power project deferred, a slew of job losses, and taxpayers on the hook for more cash at Cardiff Airport

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Unemployment in Wales increased by 5,000 to 64,000 between June and August, the increase of 0.4% took the overall rate to 4.2%.

The South West of England continued to record the lowest rate at 2.4% with the UK rate at 3.9%. The highest rate was 5.8% which was recorded in the North East of England.

The South West also had the highest employment rate at 81.0% which compared with 74.1% in Wales. UK employment was estimated at 75.9%.

Welsh average property prices increased by 2.3% to £168,318, which took annual growth to 4.5% which was the highest in the UK. In comparison, UK prices grew by 0.8% to £234,853 during August, an annual growth rate of 1.3%.

Analysis by the BBC has found workers living in coastal communities in Great Britain earn on average £1,600 less per year than those living inland. Since 2010 wages fell by c20% in real terms in Delyn the fifth biggest faller in the UK.

In seaside towns median wages were £22,104 compared with £23,785 in non-coastal areas.

The ONS’s Personal Well-being (or Happiness) Index has ranked Wales eighth out of the 12 UK ‘regions’ in terms of improved happiness since the last survey. Overall though, the Northern Irish were still the happiest in the UK with Londoners still the most miserable.

Development

UK Business Secretary, Andrea Leadsom, has deferred the decision on whether to give the stalled Wylfa Newydd nuclear power project planning permission, citing the need for more information on environmental and other impacts.

At £15bn it is the biggest energy project ever proposed in Wales. Developers Horizon Nuclear Power said the decision would heavily influence how the project progressed.

Is the Government losing interest in the project? Given EDF Energy said the construction cost for Hinkley Point C in Somerset had climbed by between £1.9bn/£2.9bn to a total cost of £21.5bn /£22.5bn last month, and the success of the Government’s recent offshore wind auction, it is possible.

Another wrinkle is the Government’s growing fondness for a new consumer pays first funding model, known as RAB (Regulated Asset Base), which has already been used to finance some large infrastructure projects, including the £4.2bn Thames Tideway ‘super-sewer’. This might also explain the delay.

In terms of economic development, c9,000 workers were expected to be involved in building the two nuclear reactors in Anglesey. Private sector funders, Japanese energy firm Hitachi, have already put plans on hold after failing to reach a deal with the UK government over the price it would be paid for power from the site.

In Chirk, wood panel manufacturer, Kronospan, will now go ahead with the firm’s £200m three year expansion project at its site where more than 600 are employed.

Wrexham councillors put Kronospan’s plans on hold in March amid concerns about the impact on road safety but the firm launched and won an appeal to the Welsh Government.  About 100 new jobs will be created. It can sometimes be frustrating for promoters of local economic growth when expansion plans can be hindered by councillors.

The Welsh Whisky Company, which currently operates the Penderyn Distillery near Aberdare, is proposing to open a second £5m distillery and visitor centre in Llandudno by 2021. The Welsh government has offered £1.4m of public money towards the project.

The firm is also redeveloping a disused building at the Hafod Morfa Copperworks site in Swansea, with an opening date of 2022.

Jobs

Eighty-two workers were made redundant in June when cheese maker GRH Foods in Minffordd, Gwynedd, went into administration.

The company has now been acquired by continental cheese supplier Futura Foods which plans to restart operations in the coming months. The firm was not able to comment on how many staff it would hire.

Hi-Lex Cable Systems, which makes door and window parts and cables for cars at its plant in Port Talbot, has announced it will close in 2021.

The Japanese firm, which supplies Honda, Audi and BMW among others, said it did not anticipate any redundancies in the next 12 months but about 125 jobs will eventually go. Any work left at the plant in 2021 will be transferred to a Hi-Lex plant in Hungary.

Tomlinsons Dairies in Wrexham has gone into administration with the loss of 331 jobs. Administrators cited increased energy costs and a fall in the price of cream as reasons why the firm has become unviable.

A further 120 jobs are to be lost at claims management call centre We Fight Any Claim in Cwmbran, Torfaen, bringing the total jobs lost over the last two months to 250. The firm said 150 of its 400 staff would remain at the company after demand for its services fell following the passing of the PPI deadline.

Furniture company Triumph Furniture of Merthyr Tydfil, has gone into administration with 252 job losses after an unprecedented fall in sales. The company previously entered administration in 2011 before a management buyout.

Peter’s Pies based in Bedwas, Caerphilly, said it had spoken to some of the 252 Triumph staff after the firm announced the creation of 110 new jobs. The company is moving to a two-shift operation after securing a number of new deals.

Transport

A Welsh Government spokesman has said state owned Cardiff Airport adds £240m GVA to the Welsh economy and sustains around 2,400 aviation related jobs.

This was after a new tax payer loan was announced bringing the total amount of cash the airport can borrow from the Welsh Government to £59.4m. Most of the original loan of £38.2 has already been drawn down according to officials, which suggests the new £21.2m blurs the line between investment and working capital. 

Its latest accounts show the airport made a pre-tax loss of £6.6m in 2017/18. Welsh ministers paid another £52m in 2013 to buy the airport.

At c£80m of public money already deployed to keep the airport operating, and with a further £21m now at risk, the economic case looks increasingly thin.

APD not devolved, Ineos chooses Bridgend for its new 4×4 and Welsh average property prices rise the fastest in the UK

Reading Time: 4 minutesUK ministers have declined to devolve powers over air passenger duty (APD) to the Welsh Government despite a unanimous recommendation by Westminster’s Welsh Affairs Committee in June. The Committee had recognised the move would adversely impact Bristol airport but decided the economic benefits of devolving the tax would outweigh this. UK Ministers attached more weight to the threat to Bristol. Passengers on economy class outbound flights of more than 2,000 miles pay air passenger duty of £78, with those on long-haul business class charged £172. Although the latest ONS figures below show that the Welsh economy outperformed the South West, generally, or when compared with the Bristol economy, it lags behind. In terms of government spending, the South West costs the Treasury £868 per person (the lowest deficit in England) compared with £4,395 in Wales, although any additional revenue raised from APD would likely reduce the Welsh block grant. An additional complexity is that the Welsh Government owns Cardiff airport.

Is it worth it? Recent analysis by Northern Ireland’s Department for the Economy has suggested cutting APD would not deliver value for money. APD does not apply on long haul flights from NI but the Province’s airports have lobbied for it to be abolished altogether. Civil servants and their consultants acknowledged that cutting the tax could help develop new air routes and there would be economic benefits, but Northern Ireland’s block grant would be cut to reflect the reduced revenue going to the Treasury, as mentioned above, this would also likely happen in Wales. An implicit subsidy to already commercially viable routes might also raise state aid problems. The Scottish Government has the power to set APD but recently declined to abolish APD on environmental grounds, although Inverness airport remains exempt.

Development
Ineos Automotive has chosen Bridgend for the production of its new 4×4 Grenadier vehicle, creating around 200 jobs with up to 500 possible in the long-term. Ineos is investing c£600m in a manufacturing and assembly plant at Brocastle, near to Ford Bridgend, which will close in September 2020. Production should begin in 2021 and will enable Ineos to employ some of the Ford workforce. At full capacity, it is hoped 25,000 vehicles a year will be produced at the new 23,250 sqm site which the firm is buying at market value from the Welsh Government. Key parts for the vehicle, which is inspired by the original Land Rover Defender, will be built at a second factory in Portugal before being brought to Bridgend for assembly. BMW will supply the engines, and engineering assistance will be provided by another German company, MBTech. Taxpayer support from the Welsh Government and funding from the UK Government as part of a competition to develop new technologies has not been disclosed.

Jobs
Up to 380 jobs could be lost with the closure of the Tata steel plant in Newport although the firm hopes to offer jobs elsewhere in Wales where it employs over 6,000. The factory, which makes electrical steel used in power transmission, has not been in profit for four years and was put up for sale in May 2018. The firm said it would have cost £50m to upgrade the site to make it competitive. The plant is in Tata’s Cogent division, part of which is being sold to the Japanese steel company JFE Shoji Trade Corporation. The sector has been suffering from over-capacity in recent years, with UK firms struggling to compete with big volume producers in China.

A claims management call centre, We Fight Any Claim, in Cwmbran, Torfaen, is cutting 130 jobs following the end of the claim window for mis-sold payment protection insurance. In 2013, the firm received a £290,000 grant from the Welsh government.

The Stats
For the first time, the ONS has published quarterly GDP estimates for Wales and the other nine English regions. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013. The latest available figures, which are for the year ended 2018, showed the Welsh economy grew by 1.8%. This ranked the ‘region’ fifth of the twelve UK ‘regions.’ The East Midlands topped the table with growth of 3.4% whilst at the bottom the South West economy declined by 1.1%. UK growth over the same period was 1.5%.

The quarter to Dec 2018 showed education grew by 3.3% and had the highest contribution to growth. This was followed by construction, which grew by 3.3%, and transport and storage, which grew by 5.0%. Manufacturing fell by 0.6%, public administration and defence fell by 1.2% and human health and social work industries fell by 0.9%. These industries made the largest negative contribution in Wales. Overall, the construction sector was the main driver of GDP followed by services. More recent estimates (six months later) for the year ended June 2019, published by ESCoE last month, ranked Wales eighth with growth of 1.3%, which suggests the Welsh economy has marginally weakened this year relative to other parts of the UK.

More data from the ONS showed unemployment in Wales fell by 11,000 to 58,000 between May and July, the drop of 0.6%, took the overall rate to 3.8%. The South West had the lowest rate at 2.4% with the UK rate at 3.8%. The highest rate was 5.0% which was recorded in the North East. The South West also had the highest employment rate at 80.8% which compared with 74.7% in Wales. UK employment was estimated at 76.1%.

Welsh average property prices increased by 1.0% to £165,303, which meant annually prices had risen the fastest in the UK by 4.2%. In comparison, UK prices grew by 0.5% to £232,710 during July, an annual growth rate of 0.7%.

Wales sees its drop in unemployment and house price growth the best in the UK, some optimism over the future of the Ford site at Bridgend

Reading Time: 3 minutesGrowth in Wales was 1.3% in the year to June 2019, which ranked the country eighth (out of twelve UK ‘regions’) according to estimates from ESCoE. London had the best performance nationally at 2.3% with Northern Ireland at 1% the worst (12th in the UK). The national growth rate for the same period was 1.5%. With the UK economy contracting by 0.2% in the quarter, low growth in Wales reflects this, but it is possible that the country has outperformed other regional economies which have shrunk.

Unemployment in Wales decreased by 10,000 to 61,000 between April and June, the drop of 0.6% to 3.9% was the best in the UK. The South West had the lowest unemployment rate at 2.7%, the North East had the highest at 5.3%, with the UK rate at 3.9%. The South West also had the highest employment rate at 80.5%, which compared with 75.0% in Wales; the UK rate at 76.1% is the joint highest since comparative records began in 1971.

In June, Welsh average earnings increased from £553 to £576 per week. London had the highest average earnings of £831; the North East had the lowest at £537. In the UK average earnings grew by 3.7% or by 1.8% after inflation.

Welsh average property price increased during the month, the 1.2% rise to £163,768 meant annually prices increased by 4.4%, the best price growth in the UK. In comparison, UK prices grew by 0.7% to £230,292 during June which left the annual growth rate unchanged at 0.9%.

There is some optimism over the future of the Ford site at Bridgend after the Welsh Government confirmed that talks with Ineos Automotive are very advanced. Ineos has been deciding where to build its new 4×4 model, with the choice between Bridgend and another site in Portugal. Ford announced at the beginning of June that it would close its Bridgend plant in 2020 with the loss of 1,700 jobs. Ineos plans to build a vehicle inspired by the Land Rover Defender, which went out of production in 2016. The Welsh Government should be in a good position to offer financial inducements to Ineos. Ford received £140m of public money since 1978 of which the latest tranche of £11m will be paid back

A report by an All-Party Parliamentary Group (‘APPG’) of MPs which looks at Post-Brexit Funding for the nations and regions has found that the UK would receive additional EU funding in the 2021-27 spending round. Three additional sub-regions are likely to slip below the threshold of 75% EU average GDP per head that would qualify them for ‘less developed region’ status. Existing less developed regions like West Wales & the Valleys, will be joined by Lincolnshire, South Yorkshire, Tees Valley & Durham. These areas would likely have received at least €500 per head in EU regional development funding over 2021-27 which adds up to an extra £950m.

Additionally, the EU has proposed that ‘transition region’ status should be extended to cover all regions with a GDP per head between 75-100 per cent of the EU average, compared to 75-90 per cent at present. Seven additional sub-regions are likely to slip below the threshold of 100% EU average GDP per head, qualifying them for ‘transition region’ status. East Wales falls into this category, as well as East Anglia, Greater Manchester, Leicestershire, Rutland & Northamptonshire, Outer London South, North Yorkshire and South Western Scotland. It is not clear how much extra funding these areas would have received from the EU, but €50 per head over the next EU spending round would equate to £560m.

The UK government has promised to replace EU funding to the regions with a new UK Shared Prosperity Fund. If the new sub regions are added, the APPG calculates this amounts to c£1.8bn pa, on top of the c£2.2bn pa already committed as part of Local Growth Funds (in England). Integrating the Local Growth Fund into the UK Shared Prosperity Fund could be problematic. The Local Growth Fund allocates funding to LEPs via competitive bidding whereas the allocation of EU funds uses a fixed formula. How the Shared Prosperity Fund will be allocated to Wales and the other devolved nations and mesh with other pots like City Deals is yet to be determined.

Wales records the biggest drop in unemployment in the UK, a new growth deal for Mid Wales announced but still no Welsh unicorns

Reading Time: 3 minutesUnemployment in Wales decreased by 11,000 to 60,000 between March and May, the decrease of 0.7% to 3.8% was the best in the UK. At 2.6% the South West of England had the lowest rate and at 5.6% the North East had the highest rate in the country. The UK unemployment rate stands at 3.8%.

Welsh average property prices decreased by 1.4% to £159,428 during the month which reduced the annual growth rate to 3.0%. In comparison, UK prices increased by 0.1% to £229,431 during May which reduced the annual growth rate to 1.2%.

A cross-border economic collaboration between south-east Wales and the west of England has been envisaged. Commissioned by Cardiff, Newport and Bristol councils, the 49 page report in to a ‘Great Western Powerhouse’ says an alliance could boost industry and enhance the regions profile. Echoing The Northern Powerhouse strategy the Great Western Powerhouse report reflects the trend towards greater regional devolution and the emergence of regional powerhouses in the UK. The report suggests a M4 powerhouse stretching from Swansea in the west to Swindon and Bath in the east, and as far north as Tewkesbury. There are already three established city regions but no overarching powerhouse concept for the region. The report argues that the Northern Powerhouse; and Midlands Engine; ‘brands’ have been successful at attracting significant levels of government funding and investment. The cyber security, aerospace and creative industries are highlighted as examples of cross-border complementary strengths. The report calls for the UK and Welsh governments to help set up a cross-border organisation to co-ordinate the initiative.

A commission has been set-up to look at alternatives to the M4 relief road south of Newport which was axed by First Minister, Mark Drakeford, in June because of its £1.6bn cost and impact on the environment. The Government has asked Lord Burns, chairman of Ofcom, to find ways of reducing congestion. The Welsh Government is currently recruiting other members of the commission to assist Lord Burns and promises an interim report at the start of next year. Whether the commission will consider how the £1bn earmarked for the M4 relief road should be spent is unclear.

The UK has produced 72 tech unicorns over 20 years, including 13 in the last year. Most are located in London with some hubs in regional cities, none are in Wales. Unicorns are defined as $1bn technology start-ups. Attracting sufficient skills is challenging for peripheral economies like Wales according to Professor Jones-Evans, Professor of Entrepreneurship at the University of South Wales who also cited access to finance as a problem. Finance from vehicles like the state owned Development Bank of Wales can help establish firms but global scaling up requires major equity investment. The British Business Bank, according to the Professor, concentrates its equity investments in the south east of England rather than in Wales, Northern Ireland and the north east of England where it is most needed. The British Business Bank is also state owned.

On interventions, the new prime minister has announced six new growth deals, three in Scotland, two in Northern Ireland and one in Wales. The UK government said the allocation of the £300m pot would depend on the strength of proposals put forward. Growth deals (also known as city deals in urban areas) are national, devolved and local government funding packages aimed at boosting regional economies often by encouraging private investment on specific projects. Cardiff and Swansea Bay are at the centre of growth deals already in place while another is being negotiated for north Wales. This new deal covers Mid Wales (Powys and Ceredigion) which will get a proportion of the £300m to be spent over 15 years. A potential of 4,000 new jobs could be created boosting the mid Wales economy by £200m a year. Transport, broadband and connectivity projects are likely to form part of the Mid Wales bid which will aim to uplift Mid Wales’s productivity. Powys has the lowest rate of productivity per hour of any local authority area in the UK. The Growing Mid Wales Partnership is gathering ideas for the deal with new developments in green energy agricultural techniques being mooted.