The economy of an Independent Wales

Wales wealth. How to get and how to spend it

Wales currency and how to pay for the investment.

[ The cost of border and trade and currency transaction costs ]

So if you have been following, a £31 billion investment commitment.

Before we get to that however, the remaining costs of Independence.

Border and trade costs.

It often appears as headline news when someone offers a report, usually an ‘ academic ‘ report,  into the costs of Independence.

There is however a noticeable, or perhaps not so noticeable, shyness about extolling the very many benefits of Independence.

There are so many figures, by so many different ‘ studies ‘  with so many assumptions,  membership of the EU, or maybe not, will there be a hard border, what trading group will Wales belong to and with what tariffs.

So many assumptions as to make these studies at best questionable

The economy of an Independent Wales

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

A Wales Plan.

A major contribution to the SNP losing the 2014 referendum, was confusion in its future plans.

In the face of coordinated attack from the Westminster government, the media and vested commercial interests, it often showed a lack of clarity.

While a majority of the SNP membership wanted Scotland to have its own currency, the leadership, particularly Alex Salmond, argued for Scotland to retain the pound.

This uncertainty was unhelpful in a close campaign, it caused some in the financial sector to threaten to move from their Scottish bases and it handed the negotiating initiative to the UK Treasury.

The other problem was the Scottish government placing oil at the centre of its economic plan

The opposition to Independence made issues of the ownership and revenues from North Sea oil, the volatility of prices and the future of supplies and the future demise of fossil fuels.

All playing into the anti Independence narrative. 

 

Recently another ‘ academic study ‘, this time into the costs of Ireland unification.

The costs, they say, would be between £7 billion and £17 billion, although with such a variance you would think any respectable  academic wouldn't want it published

It is arrived at using the same unreliable and implausible  data that puts  N.Ireland, with 2.9% of the UK population, responsible for 23.7%  of the UK budget deficit.

£9.4 billion against £39.7 billion [ 2020 Government Expenditure and Revenue figures ]

The study also failed to take into account the savings of one united government, no border costs, a single financial and taxation system and the ability of the N.Ireland economy to grow in line with the Republic, rather than being restricted by a failed UK system.

No matter the veracity of the headlines, these are the forces coming Wales way as it nears its bid for Independence.

So ignore the doubters, the hesitaters and the users of dodgy data. Wales has a plan, a credible plan, a considered plan and a transparent plan.

A Plan to benefit Wales.

The economy of an Independent Wales                       

Wales wealth. How to get it and how to use it.

The New  Wales economy. How to start.

Wales has had its referendum, next is the transition.

The transition period, two years, was agreed between Scotland and the UK government, prior to their referendum.

This transition is when Wales draws up its necessary initial legislation in areas such as, currency, Central Bank, taxation. Although many others will be a continuation until a later date.

It will also be the time in which any agreements with the remaining UK [ UKr ] will be made.

This is a time for lawyers, civil servants and the politicians.

These posts concentrate on post transition. When Wales becomes Independent.

How does Wales start its economic journey?

Prior to the declaration of Independence.

Prior to the transition or referendum, Wales would have set out its economic plan.

How else would it have won a referendum?

This blog's suggestion is that it would go something like this

The economy of an Independent Wales

                or.

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

Currency and the Federal Bank.

Before Currency and the Federal Bank, we need to look once again at Wales ‘ so called ‘ budget deficit, for they are connected.

Wales budget deficit. Does Wales have one, how much is it and does it really matter.

With regard to the first two, no one really knows.

As we have previously seen, but briefly repeat here, the data upon which Wales deficit is based is decidedly untrustworthy.

The deficit repeatedly cited is based on a financial report by the Wales Governance Centre.

That, in turn, uses the data of the Government Expenditure and Revenue Wales

[ GERW ]

The authors concede that very little financial data is collected on a Wales specific basis, but rather England/Wales, or UK wide.

GERW is not a conventional accountancy process, indeed it is argued that 90% of the figures used have no verifiable audit trail. 

Spending for Wales is generally allocated on a population share basis, whether or not that can be justified.

Revenue income is collected on a UK wide basis by HMRC. It is then disaggregated to get Wales figures by, in the words of HMRC, using estimates, assumptions and adjustments.

HMRC concedes that Wales revenue figures are an underestimate, as some taxes, mainly corporate taxes,of businesses in Wales, have been allocated to the HQs, many of whom are outside Wales.

They however have failed to estimate the loss to Wales revenues.

The government may argue that GERW is an approved system, but as Prof Murphy of Tax Research argues, if the figures used by the system are suspect, then the outcomes must be suspect.

In Wales' case, indeed they are.

The outcome frome Wales financial analysis, by these methods, find that Wales has a budget deficit of £13.7 billion.

In the same period the UK budget deficit was £39.7 billion.

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

It makes no sense.

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.

The Future of Wales Report. [ Or take your pick ]

The Independent Commission on Wales Future Constitution, has issued its final report, so we can all stop holding our breath.

It's a wordy document. 135 pages

It has an impressive bibliography referencing a seemingly endless supp;y of publications.

It has had contributions from an equally impressive list of worthies.

And it has an expert panel

It was enough to almost overwhelm. Almost, but not quite.

What was striking, that in spite of this, they were unable to come to conclusions.

Not just that they were unable to come down just a teeny bit in favour of one option, but in most areas.

The report is heavy, to use the phrase of the economist Arun Bose, on errors of reasoning.

It also contained a fair share of contradictions and also, I'm afraid, substantial errors.as we shall show.

It is beyond the scope of this modest piece to analyse in detail and the intention is to concentrate on the Commission's approach to the Independence option, but it would be remiss not to have a little comment on the other options and the shortcomings of the report.

As the report is 135 pages long, with apologies, the response is inevitably lengthy.

How can Welsh Labour govern, if it doesn't understand the basics.

A lifetime of being a very small part of the UK. A very small part of UK Labour. And for the trade unionists, a very small part of the UK trade union movement, has led Welsh Labour to the mindset of being very small.

The government of Wales, which has been exclusively Welsh Labour. No more than that of running a county council [ no offence to county councillors ].

.

They are given a grant together with limited ability to raise finance. Just like a county council.

They set up little committees to divide it up. Just like a county council.

They share it between areas for which they have responsibility. Just like a county council.

And for their peace of mind they have someone above them to blame. Just like a county council.

 

They have persuaded themselves, or have been persuaded, that Wales cannot survive on its own

They argue that Wales is only safe if it is ‘ protected ‘ by belonging to the UK Union.