The economy’s sluggish performance compared to the rest of the UK and Europe is a millstone around our necks. Gross value added – the main measure of productivity – places Wales at 74% of the UK average. Although economic development is a devolved responsibility, many key economic levers – such as monetary policy and employment law – remain responsibilities of Westminster. A fair assessment would therefore share the blame for inadequate economic performance between our two governments.
Since the globally recognised Welsh Development Agency (WDA) was wound up as part of Rhodri Morgan’s ‘Bonfire of the Quangos’ in 2006, Wales had struggled to plot a new course for economic development until 2009-10, when a clear economic policy was set out through former Deputy First Minister Ieuan Wyn-Jones’s Economic Renewal Plan (ERP). The ERP was a quiet earthquake in many ways. It ditched the long-held belief that dishing out grants to attract foreign branch factories was the peak of Welsh economic ambition, and replaced them with repayable loans and equity finance.
The ongoing ERP also carefully targets business support towards sectors with the potential for long-term growth – like life sciences, advanced manufacturing and energy. This approach proved controversial, and unpredictable, as fast-growth businesses can come from anywhere, at any time, from any sector.