The State of Britain

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

Reading Time: 3 minutes

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%.