It's not just bad weather that's slowing our economy - its bad Brexit
PUBLISHED: 00:01 08 June 2018
A Hard Brexit would wipe £5bn off the Welsh economy, says Plaid Cymru MP JONATHAN EDWARDS. Wales can't afford this stormy outcome
The bad weather in the first quarter of 2018 has certainly had a dampening effect on the UK economy, but boiling it all down to the weather ignores the red, white and blue elephant in the room: it’s Brexit.
The first quarter of 2018 was characterised by low growth, a fall in business investment and the shrinking of the economy. This is tempestuous news for us all, but particularly the Brexiteers. Those who once dismissed all pre-referendum forecasts of a weakening economy as ‘project fear’ are now faced with the cold, hard facts: their Brexit utopia is shaping up to be nothing more than a bust. And it hasn’t even happened yet.
I know in Brexit Britain we don’t trust experts, but let’s look at the facts for a minute.
The UK’s GDP growth in the first quarter of 2018 was 0.1%. When you look at GDP per capita, arguably an even more crucial measure, the UK’s growth was negative. In comparison, almost all of our European neighbours enjoyed a much brighter outlook. Austria grew at 0.7%, Finland 1.1% and Spain 0.7%. In case you’re wondering: they too had bad weather.
It’s important to also look across to the Republic of Ireland, which the EU has predicted to grow by 5.7% this year. Once again, the Republic of Ireland shows Wales and Scotland just how much a country can achieve with the full powers of independence.
One reason for low growth has been the fall in business investment in the UK. This has fallen by 0.2% this quarter, but this is a fall in the already anaemic levels of investment caused by endless austerity. Now with Brexit on the horizon, businesses are not going to invest in the UK when they have little or no idea what is going on. With no clarity over the type of Brexit, and no end to the will-they-won’t-they charade over the border with Ireland, why would businesses invest further in blusterous Brexit Britannia?
And finally, the governor of the Bank of England confirmed that, as he had warned pre-referendum, the economy is 2% smaller than forecast before the Brexit vote: this is a loss of £40bn which would have generated an additional £15bn of tax revenue. Each household across the UK is more than £900 worse off as a direct result of voting to leave the EU.
All this is happening before we have even left. Plaid Cymru has maintained since the referendum that economic uncertainty is toxic, particularly for Wales.
Misruled by successive Labour governments lacking in any ability and overlooked by its Westminster overlords, Wales is not only the poorest country in the UK, but also in Western Europe. In fact, Wales receives more than five times the UK average and almost seven times as much as England in European Regional Development Funds per person as a result of this economic mismanagement.
Oxford Economics UK Regional Forecasts have projected England and the UK as a whole to grow by 1.7% this year, while Wales is once again subject to playing catch up, with gloomy growth projections of only 1.3%.
Shackled as we are to Brexit Britain and crippled by Westminster rule, Wales is being failed and our people are being left with less money and a poorer standard of living than our neighbours.
The fall in UK growth earlier this year was, in part, caused by a fall of 0.9% in exports at the end of 2017.
As a net exporting nation, this hits Wales harder than anywhere else. Wales exported £16.4bn last year, 60.3% of this going to the EU. With Wales exporting more to the EU than the UK average of around 49% according to the Cross-Whitehall Study, Wales has the most to lose from crashing out of the EU.
Leaving the Single Market and Customs Union, a “hard Brexit”, would wipe £5bn off the Welsh economy. For a country that is already the poorest among its neighbours, Wales can’t afford this stormy outcome and neither can our people. It will be the families, businesses and farmers that will pay this price with wages dwindling and the cost of living soaring.
If Theresa May is truly committed to frictionless trade with the EU and an open border in Ireland as she claims, she must put people’s livelihoods before her bitter, blundering Brexiteers. This means staying in the Single Market and Customs Union, as Plaid Cymru has always maintained. This has served Wales well. It gives us access to the staff our NHS needs to treat our sick, and removes all barriers to trade for our food and drink and manufacturing sectors that depend on the time-critical and delay-free transfer of goods.
We can’t afford to lose it.
In 2016, the then UK chancellor began his Spring Budget Statement reporting on an economy “set to grow faster than any other major advanced economy in the world.” This year, the current UK chancellor confirmed in his Spring Budget Statement that the UK economy is now the slowest growing advanced economy in the world.
We’ve always had bad weather. This change is down to Brexit.
Jonathan Edwards is Plaid Cymru MP for Carmarthen East and Dinefwr and the party's Westminster Treasury spokesman