It’s better than you think

There are more reasons to be cheerful about Wales' economy as we enter the challenges of 2017 than you might think.

5th January 2017

Earlier this month, the annual gross value added (GVA) statistics were released for the UK regions. An indicator of economic growth, GVA is a measure of the increase in the value of the economy due to the production of goods and services. It is measured at current basic prices, which includes the effect of inflation but excludes taxes (such as VAT) on products.

Not surprisingly perhaps, the headline highlighted yet again by both the press and politicians was that Wales had the lowest GVA per head figures of any of the UK regions in 2015 at £18,002. In contrast, London was nearly two and a half times bigger at £43,629.

However, very few economic commentators seem to have noticed that since the recession of 2008, Wales has shown the third best growth in GVA per head after London and the South East of England, the two most prosperous parts of the UK.

In fact, the Welsh economy, measured in terms of GVA per head, had grown by 12.9% between 2008 and 2015 as compared to 11.9% for the UK as a whole. 

Northern Ireland had the lowest increase in economic activity of any UK region at only 3.3%, which suggests that, at current rates of growth, it should be overtaken by Wales in the UK prosperity league table by 2018.

But how has the economy grown across Wales over the last eight years?

Certainly, it has not been geographically, even with Flintshire and Wrexham (23.6%), Central South Valleys (21%) and Powys (19.4%) experiencing the biggest expansion in GVA per head since 2008.

In contrast, the lowest growth since the recession has been experienced by the most prosperous parts of Wales, namely Cardiff and the Vale of Glamorgan (4.6%) and Newport and Monmouthshire (4.7%), which seems to burst the popular myth that growth in Wales is focused around the capital city and surrounding areas.

Surge in manufacturing

In terms of the key sectors in the economy, manufacturing remains a critical industry and has shown a remarkable renaissance. Whilst it had declined to 14.5% of the Welsh economy in 2008 - the lowest level recorded in modern times - it has since grown to account for 16% of the economy of Wales in 2015.