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London finance trumps Welsh manufacturing

In this post we discussed the wealth gap in Wales, based on ONS figures showing Household Disposable Incomes in the UK.

A household can only have disposable income if there is money coming in. This in turn is dependent on employment (or lack of) and the quality of jobs available.

So let’s take another view at the current economic situation in Wales.

GVA*

IN 2014 the UK’s average GVA stood at £24,616 per head.

England is by far the biggest single constituent part of the UK. It’s GVA stood at £25,367 – more than the UK average, or to put it another way 103% of the UK average.

That can only mean one thing – that the average GVA for the other constituent parts must be pretty bad. And it is.

Wales’ GVA per head in 2014 stood at a miserable £17,573, only 71.4% of the UK average, and the lowest in any of the UK countries.

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Wales, with 5% of the population, has a ‘regional’ share (as dubbed by the ONS) of only 3.4% of the UK’s total GVA. The London region, with a little over 10% of the UK population has 22.6% of the GVA regional share.

The differences within regions is even more stark.

Inner London West’s GVA per head stands at a  staggering £134,961 (7.4% growth on 2013), while the lowest GVA per head of the population in the UK is that of West Wales and the Valleys at £15,745 (with a modest 2.5% growth on 2013). The two very lowest GVA per head in the whole of the UK are both sadly here in Wales, with the Gwent Valleys at £13,479 and Anglesey at £13,162. Contrast these to the highest, Camden and City of London at an eye-watering £298, 520 per head and Westminster at £218, 788 per head. The best performing region in Wales is Cardiff and the Vale of Glamorgan, where it’s GVA per head stands at less than 10% of that of Camden and the City of London, at a paltry £22, 107.

Wales on the whole saw a GVA growth of only 2.4% between 2013 and 2014, the lowest growth in the whole of the United Kingdom, while London grew by 6.8%. While these percentages seem small, imagine a region’s economy growing three time faster than another region’s economy year on year, and you soon see why we have such wealth disparity between Wales and London.

In fact, between 1997 and 2014, Wales’ GVA has decreased from being a poorly 73.6% of the UK’s average in 1997 to being a pitiful 71.4% in 2014. But keep in mind that the UK’s GVA per head has increased in that time, and that in London specifically it now stands at 173.3% of the UK average, where in 1997 it ‘only ‘ stood at 159.8% of the UK average.

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Wealth creation opportunities have flowed from Wales and other parts of the UK to London and the south east of England.

The ONS provide a brilliant breakdown of the industrial variation, looking at where this wealth is created. This makes for interesting reading.

Both Wales and Northern Ireland are disproportionately dependent on the public Sector. In Wales over a quarter (25.47%) of our GVA come from public services, compared to England where less than a fifth comes from the public sector (17.15%). England’s wealth creation is far more evenly distributed amongst the sectors, with three times as much of their GVA coming from Information and Communication (6.74%) compared to Wales (2.83%).

Yet Wales is far more dependent on manufacturing, more so than any other constituent part of the UK. Nearly 17% of our GVA is made up of manufacturing (16.98%). Only 10.3% of England’s GVA is made up of manufacturing. But England is twice as reliant on Finance (8.72%) compared to Wales (4.28%). London is far more reliant still, with a whopping 18.86% of its GVA coming from the Financial sector, the single biggest source of London’s GVA.

This final statistic starts to explain the massive disparity in the figures between England, most notably London, and Wales at the top of this post.

When the UK Government, based on the banks of the Thames in the heart of London, looks at its economic policies it looks to look after its own. The economic contribution of the City far outweighs anything done in Wales. Wales is consequently ignored.

Wales makes things. Tangible things. Solid things. Things that are useful that you can see, touch, and feel.

London sells things. Abstract things. Incoherent things. Things that you can’t see, nor touch nor feel.

When the City of London, with it’s £298, 520 GVA per head wants a bailout for selling something that didn’t exist they got it.

But when our manufacturers  with our meagre £17,000 GVA per head needs a bailout to allow them to continue producing and manufacturing essential components there’s nothing.

These figures and graphics can all be found here.

Gross value added (GVA) is the measure of the value of goods and services produced in an area, industry or sector of an economy, in economics. In national accounts GVA is output minus intermediate consumption; it is a balancing item of the national accounts’ production account.

 

 

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1 Comment on London finance trumps Welsh manufacturing

  1. Wales needs to be manufacturing hi-tech goods…not poundland products

    Like

1 Trackback / Pingback

  1. Low pay, high dependency – BELLA GWALIA

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