Brexit is a golden economic opportunity for Wales

The Welsh Labour establishment likes to claim that Wales’ Brexiteers voted against their economic interests in the Referendum, seemingly attributing this to the false consciousness of the workers. A classic example of this was when Labour First Minister Carwyn Jones said there is “no evidence either way for what people voted for”.

Welsh Government Minister Eluned Morgan went further when she argued “People need to understand that they will pay a high price for the vote that took place last year”, and the Welsh economy will be impacted “if we are not part of the single market and the customs union.”

But their pessimistic outlook is not reflected in the performance of the Welsh economy. Wales’ ‘Dragon economy’ outperformed England, Scotland and Northern Ireland in Gross Value Added in 2016 and Cardiff is the UK’s fastest growing capital city. Unemployment in Wales is lower than the rest of the UK.

Indeed there are good reasons to think Welsh Brexiteers were voting intelligently and in their economic interests.

Wales’ Leave vote helped ensure the UK averts the serious economic risks of continued EU membership, including poorly drafted regulations, spiraling budgetary contributions and fiscal harmonisation.

More fundamentally, Wales is benefiting from the rebalancing of the British economy presaged by Brexit. Brexit gives UK Government industrial policy a renewed regional impetus. Greater engagement with the global economy benefits Wales’ export sector. The Sterling exchange rate has unlocked pro-growth factors. Brexit anticipates reform of the Common Agricultural Policy and regional spending. And leaving the customs union will reduce the cost of living for Wales’ poorest.

The UK Government’s Industrial Strategy is committed to ensuring all parts of Wales are match fit for Brexit. Prime Minister Theresa May wants “more jobs in Wales, more exports of Welsh products and more growth for the Welsh economy.” And Trade Secretary Liam Fox is preparing “an independent trade policy to help Welsh businesses make the most of new trade opportunities.”

Wales is ahead of any regional economy of England with the value of its exports having increased by 19% in 2017. Significantly Welsh exports to non-EU countries grew 21%, faster than the 15% growth in its exports to EU countries.

Unrestrained by EU protectionism and regulations which deflect trade away from the global economy into the EU, Welsh exporters will discover new demand for their high quality goods in the wider global economy.

Welsh exporters will also gain from trade deals with the faster growing and more populous economies of the world, which can be contemplated because we are leaving the EU’s customs union. Wales and the UK will continue trading with EU member states, but Wales’ global connections are becoming more varied, stronger and enticing as we leave the EU.

For example, after Welsh Secretary and Board of Trade Advisor Alun Cairns’ trade mission to America, Robert Johnson, US Ambassador to the UK, said: “Wales is an important partner for the US. There is a significant amount of trade and investment between us which is great news for workers in Wales and America.”

The Welsh Office has also led major trade missions to Qatar, in order to unlock Middle Eastern markets for Welsh businesses and to Hong Kong, showcasing Welsh products and services to Asian markets.

Wales is attracting more foreign direct investment. More than 2,500 new jobs were created by inward investment in 2016-2017 through 85 major investment projects. The commitment of Ford to Bridgend regardless of any Brexit deal, Toyota’s decision to build its new Auris model engines in Deeside and Aston Martin’s up-scaling of production in St Athan are only three examples of recent big ticket investments in Welsh industry.

Groups including GlobalWelsh are encouraging entrepreneurs from the diaspora to invest in Wales’ future economic success and the Welsh Brand is promoted with renewed vigour as it was in #WalesinLondon week, during St Davids’ Day celebrations and at the Hong Kong Festival of Innovation.

The IMF estimated that before the Referendum Sterling was overvalued by between 5% and 20%. Its subsequent adjustment has boosted manufacturers, now in their ninth month of continuous expansion, the longest for half a century. At the end of 2017, Lloyds’ Purchasing Managers Index (an indicator of manufacturing sector buoyancy) found Wales had the strongest performance of the UK regions.

Wales’ visitor economy is booming with Brexit and the exchange rate makes it more attractive to visit. Wales boasts more blue flag beaches per mile than anywhere else in Britain, more castles per mile than any other European country and three UNESCO world heritage sites. It is hardly surprising nearly a million overseas visitors came to Wales last year.

The Common Agricultural Policy has ill-served Wales’ rural economy. Its subsidies have stifled the development of new business models. The average age of a farmer in Wales is 62, partly a result of regulations that deter new entrants. Environment Secretary Michael Gove promises devolved administrations more powers to shape policy for “their individual nations”, giving rural communities more direct influence over agricultural policy.

Regional spending in Wales is in need of reform. The Auditor General for Wales has expressed concern about the effectiveness of EU project evaluation. Ending the UK Government’s net financial contributions can better finance regeneration projects, while more democratic input from voters will favour schemes that reflect local priorities rather than the vanities of EU state building.

Wales’ poorest communities will gain most from Brexit. Firstly, the UK Government has said it will use Brexit to lead a race to the top on workers rights and wages. Secondly, scrapping EU trade barriers can substantially lower the cost of living for poorer households. Thirdly, by taking back control of the £350 million a week we are billed by Brussels we can spend this on the priorities of our communities instead. And the balance of demand and supply in the labour market will cause an improvement in wages.

Welsh Secretary Alun Cairns has described Brexit as a “golden opportunity for us to recast our place in the world.” It does now appear that the ‘Dragon spirits’ of Wales’ real economy are soaring high as we prepare to go out in to the world.