The State of Britain

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

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Unemployment 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.