With Wales’ low productivity levels, how will the Welsh Economy fare post-Brexit?

Industrial productivity in Wales isn’t always where it should be – a recent report highlighted that Wales had the second lowest levels of productivity in the UK.  There is definitely room for improvement. The regional gross value (GVA) stats reveal that Welsh residents only generate just over £20k per head – thousands of pounds behind their English neighbours.  Many believe that the uncertainty surrounding the UK leaving the EU has had a direct impact on productivity in recent years – and uncertainty remains as as to what will happen in 2020.  So far, we’ve seen contradicting reports and predictions, so we’ll keep our eyes peeled.

However, the Welsh Government are already taking steps to improve productivity and are also working on employment prospects – here’s where changes are already underway:

Education

The Welsh Assembly Government are responsible for education in Wales, and the actual qualifications and courses available are broadly similar to those found in England.  However there is unsurprisingly far more provision here for Welsh speakers and for learning the Welsh language and these will continue.

Wales has for many years been a beneficiary of EU funding, particular for tech skills training and job-related education, which has proved successful, Cardiff is now a major tech hub.

However, outside the major cities, there are many deprived rural areas in Wales, some with poor access to transport.  In these areas, local authorities are encouraging students to either stay on in school past age 16, or move to further education or an apprenticeship, helping young people to continue their education, even if it is only part-time.

Educational bodies have invested heavily in digital signage software – using modern tools and techniques to engage with the public. On these innovative boards, they are able to advertise the courses that are available whilst also highlighting where Welsh residents are able get this additional training for free.

This type of digital advertising is expected to increase the take up rates for people signing up to college or university courses – helping to improve the prospects and levels of education among people living in rural communities.

However, a better education in rural areas will present these communities with new challenges – many students currently obtain their education in Welsh universities then relocate after they have completed their qualifications. Recent stats show that over 40% of graduates will leave Wales.

The Welsh Government will need to ensure that high quality jobs and positive career prospects are available if we are to retain talent within the Principality.  So which Welsh industries are likely to create jobs?

Manufacturing

Wales has an extremely diverse manufacturing industry, although it has seen some decline in recent years. Wales exports 3.2 billion to Germany and £2.7 billion to France annually with metal being one of their biggest assets.

Steel manufacturing has been a constant worry, with towns like Port Talbot almost entirely dependant on the steel industry.  Thankfully, the Government and Unions were able to work with Tata Steel to prevent the plant from closing, but in a post-Brexit climate, uncertainty remains.

The Welsh automotive industry has also been hit particularly hard with the loss of 2,000 jobs announced for Bridgend Ford, however Ineos have announced they will be coming to the site, and the new Aston Martin factory a short distance away in St. Athan has brought partial relief, although at present Bridgend is still likely to see some losses overall.  However, the creation of a new manufacturing park in Bridgend could attract other manufacturers.

Furthermore Wales is becoming recognised for it’s expertise in the manufacturing of electronics – there are now 130 North American companies based in Wales and over 30 Japanese, including Sony in Bridgend.

Tourism

One of the biggest assets Wales has is it’s beautiful scenery.

From rolling hills, to mountains, to lakes, to unspoiled beaches (not to mention Barry Island for Gavin and Stacey fans), the Welsh tourist industry continues to attract tourists from all over the world – as well as adventurers.  North Wales is particularly popular now with extreme sportsmen drawn to purpose built attractions like Zip World, which takes adventurers down Europe’s longest zip lines, meanwhile classic seaside resorts like Tenby, Llandudno and the unspoilt Gower coastline continue to draw visitors.

Scaling peaks is also an attraction, with climbers hosting a Welsh Three Peaks challenge, climbing Snowdon, Pen y Fan and Cadair Idris within just 24 hours – and the principality is also popular with mountain bikers and cyclists.

Directly and indirectly, the Welsh Tourist industry contributes £6.2 billion or 13.3% of the total Welsh economy, employing over 170,000 people.  The Welsh Government has a number of projects already in place to support tourism.

Summary

As Wales now faces the prospect of losing a large amount of future investment from the EU, it’s easy to only see doom and gloom, however early indications are positive.  Earlier this month, the latest NatWest Wales PMI^® data signalled a faster expansion in business activity in February, the upturn in output quickened to the strongest since last September, and the data indicates this was supported by a steeper increase in new business, backlogs of work returning to growth, and business expansion happening at the fastest pace for two years.  The Welsh Government have also promised heavy investment in the NHS and more road improvements in this year’s budget.

There is some lingering uncertainty, but all the indications are that even in the face of Brexit, Wales can thrive.