Growth 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.