Wednesday 7 July 2010

Viability depends on GDP

A comment on a previous thread raised, once again, the old chestnut about whether Wales is viable or not as an independent country. My response was to say that the issue is a complex one, but I'm quite prepared to agree that, as things stand, with the current level of GDP per head in Wales, we could not afford the current level of public expenditure within the current level of taxation.

I think that that is probably a fair statement to make; but it does not prove, as opponents of independence might argue, that Wales is therefore not viable. Nor does it prove that Wales would either have to slash services or increase taxes dramatically if we were independent, which is the other common attack.

The point is that there were three variables in the statement I made, not two. The most important one is the part about our relatively low GDP; increasing that is key to our long-term viability as the sort of society in which most of us would want to live.

I don't think it's entirely fair to say, as some of my colleagues sometimes seem to be claiming, that Welsh GDP is at a low level as a deliberate result of the policy of successive governments; but the only part of that phrase that I'd delete is the word 'deliberate'. I don't think that anyone can really argue with the proposition that relative inequalities between different parts of the UK must be the result of the policies pursued by different governments, even if they were not the intent of such policies.

What I have never understood is why opponents of independence continue to rely on the relative underperformance of the Welsh economy to justify their stance rather than put all their efforts into eliminating that under-performance. Why wouldn't even the staunchest of unionists want to see Wales at least equalling the UK average?


Anonymous said...

Independence is the vehicle to increased prosperity for Wales as it will force the Welsh Government and exchequer to formulate policies which will match the standard of living people wish to have.

Without independence I don't see this happening.

Independence is the vehicle for economic transformation as everything will have to change. I don't think much of Welsh political society want that change
because it would raise too many difficult questions about their assumptions and priorities.

Adam Higgitt said...

A superb post, with which I'm in almost complete agreement. I've never understood the few unionists who seem to think that the way to argue their case is to suggest that Wales can never be prosperous enough to pay her own way, and who appear to take delight in the income/expenditure gap in Wales.

The flip side of course is a nationalist party that appears to argue only for a bigger handout from London can hardly be surprised when voters refuse to accept that Wales can ever be self-sustaining.

John Dixon said...


Apologies for delay in moderating comments - been away.

Point taken. There is always a balance between presenting a clear outline of how different things could be in the future and arguing for the best deal possible under current arrangements. I'd have to accept that it we appear only to be arguing for a bigger handout, then we are not getting that balance right.