The economy of an Independent Wales.

                       or

Wales wealth, how to get it, how to use it.

It's the economy stupid. So said James Cavelle, Bill Clinton's campaign manager, when asked what they should be stressing.

So it is with Wales in Independence

Wales punches above its weight in many areas.  It can point to world champion fighters,Olympic and world athletic medalists. cycling champions and grand slam rugby champions.

It offers to the world the very best in music, arts and culture

It has stunning scenery, beaches, mountains, rivers and lakes.

It has innovative and resourceful people. 

In spite of all that. Wales suffers economic and financial shortcomings.

Its people are suffering from poor public services, health and social care, education, housing and low wages.

Its businesses from lack of investment and poor productivity

The Welsh government is powerless to change this dire situation.

All the improvements Wales seek cannot be enacted in the present system

It needs more money. It needs to grow the economy..

Under the present system of devolution, the Welsh government cannot grow the economy, they can only manage it. [ The Silk Commission on Devolution ].

Devolution cannot grow the Welsh economy.

An Independent Wales can.

This will show you how.

This blog and the posts within, have accused the Welsh Labour government,  Plaid Cymru and various other bodies, of failing Wales.

It has attempted to expose the myths, surrounding Wales being too small, too poor and too dependent.

It has taken  issue with the detractors of Wales' ability to govern itself and thrive.

The next step and perhaps the most ambitious is to show what Wales' economy would look like when Independent.

Studies and commentators have predicted dire things if Wales chooses the route of self government.

These predictions are based on flimsy arguments and dubious data.

The Independent Commission on the Future Constitution of Wales, was conspicuous by the lack of real examination of the future, although there were reams of hypotheses of what could prevent Wales getting there.

Their ‘ evidence based ‘ debate, contains very little actual evidence.

They say in their report that ‘ it is a widely held view that an Independent Wales will start with a budget deficit,’.They say that whatever the size of the deficit, hard choices of raising taxes or cutting services will be required.

The vague statement of ‘ whatever the size of the deficit ‘ shows very little sign of ‘ evidence based ‘.

Also the statement of an Independent Wales starting life with a budget deficit, being widely accepted, has very little foundation.

There has been no definitive studies carried out into what the state of Wales financial or economic situation would be in Independence.

The assumption on the deficit is made entirely on accepting a so-called deficit under the present constitutional arrangement and assuming that some part of that must carry over into an Independent state.

However as even the present deficit is arrived at by the use of some very dodgy data and the conclusion that Wales has a multi billion pound deficit cannot be sustained, leaves all these assumptions floundering.

As stated elsewhere, when there are doubts regarding the data, it would be wise to ensure that the outcomes make logical sense.

The study by the Wales Governance Centre, that started these rumours, concluded that Wales had a budget deficit of £13.7 billion.

At the same time, the UK budget deficit was £39.7 billion,

This meant that Wales, with 4.8% of the UK population, is responsible for 35% of the UK deficit.

That cannot be a logical, sensible, conclusion.

An Independent Wales economy,

What can be seen as an impediment to this study is that There is no Independent Wales and that a study of the future must of necessity be predictions. So will they form an accurate assessment..

Economic predictions, future projections are carried out on a regular basis and with remarkable accuracy.

Large, successful businesses continually carry out such future projections. It is what they base their investment plans on. Their projected profit margins to attract finance.

Financial markets, energy prices all base their activities on future projections.

So can we regarding Wales' future economy.

It's not a shot in the dark or crystal ball projection

This will be logic and evidence based.

It is however projection and the margins of error this involves.

The Welsh economy is a vast subject covering many areas and business sectors and although they are interlinked and there will be some repetition they will be covered under individual titles.

They will come in individual but continuous posts.

So we start.

The start of the new nation.

Referendum done, negotiations done, Independence declared. parties over.

What now?

The people of Wales, in year 1 can expect to see little change in its circumstances.

That is not to say change will not be taking place.

Prior to Independence there will be legislation drafted to set up a Federal Bank, legislation on tax and benefit systems. These being the immediate priorities.

On Independence these will be enacted.

Wales will have a Federal Bank, with similar powers and responsibilities as the present system’s Bank of England.

Such a bank is necessary from the onset in order for Wales to form its own monetary and fiscal policies and to control Wales currency movements

It regulates the banking system in Wales and has the sole authority to print Wales currency

It was projected in the 2014 Scottish referendum discussions that their Federal Bank would cost approximately £40 million to set up and that it would be two years before it was self financing.

The Commission on the Constitution in Wales  seemed to see a problem in the recruitment and cost of this institution.

There are 214 Central Banks in the World, with even the poorest nation having fully functioning ones.

They have managed to recruit their bankers and it is difficult to reason that Wales would not.

As for cost. As stated there is a short period initial investment, which is quickly turned into a national self financing asset.

The state institutions and cost.

Although Wales presently has government departments,  Wales will require new and enhanced departments of state to function as an Independent nation.

Tax and customs. Pensions and benefits, International trade. Justice and policing and defence, will be new to Wales.

Finance, health and social care, education and other responsibilities, presently devolved, will need to have enhanced departments.

New IT systems and the transfer of data for taxation and benefits. 

Of course Wales being Wales, there has been no visible work done on finding the costs.

We do however have reasonable guides. 

Prior to the 2014 Scottish referendum, a number of estimates of setting up costs relative to Scotland were made.

Professor Patrick Donleavey of London School of Economics argued that the startup costs could be as low as £200 million as much of the infrastructure of government already exists.

The UK government however argued for a figure of £2.7 billion. They were accused of allocating the costs of all 180 departments that exist in Westminster to an Independent Scotland.

A more realistic and unbiased assessment comes from the Scottish Institute of Chartered Accountants with a figure of £1.5 billion.

The major part being one off costs.

 In using this figure as a guide, it should be noted that the costs for Wales would be expected to be lower, having a smaller population. Without the complications of the oil industry and no significant financial sector to unravel.

Although the Scottish referendum is the nearest example, it would be wise to avoid being too hung up on following their example.

As Professor Young, author of How does peaceful secession happen, says, ‘ no two secessions are the same. ‘

Wales has no need to either, to wait for Scotland to leave the UK, nor to copy its path.

Wales ambition, vision and indeed the economy that leads to it, are Wales alone. It can either make the case for Independence or not. It doesn't need to look elsewhere for a lead.

Of course it is wise to take the best practice and experiences of others, but not let a lack of confidence give those practices and experiences undue weight.

Nor when we plot the economic path, should spreadsheets, accountants and politicians who still follow Margaret Thatcher's economic philosophy of treating the nation's economy like a household budget, influence Wales economic decisions.

The whole purpose of Independence is to improve the welfare and living standards of the Welsh people and maximise an Independent economy to fulfil those aims.

Wales must ignore the negative commentators and use whatever economic and financial tools available to it as an Independent nation.

Next up.

Currency and a Federal Bank.  

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