The economy, stupid. This was the strapline that was used so successfully by Bill Clinton during his first campaign for presidency in 1992, and it continues to be true in politics across the globe today.
In responding to Plaid Cymru leader Adam Price during this weeks Plenary in the Senedd, First Minister Mark Drakeford trotted out the tired argument that Wales couldn’t afford to be independent:
“I think closing the fiscal gap is a proper ambition for any Welsh Government. It would certainly have to be an ambition for a Government led by the Member that seeks to take Wales out of the United Kingdom, because then he will have to find a way of explaining to the Welsh electorate how the £13 billion that is spent in Wales above that which is raised in taxes here in Wales is to be filled by his Government when that £13 billion is no longer available to spend on public services here in Wales… how will people in Wales manage then, when they have not just a bit of a gap, but £13 billion-worth of a gap that his party would have to find a way to fill? And they can’t, and they know they can’t, and they will have to explain it.”
It’s more than a tired argument, it’s just plain lazy.
We’ve argued before how the fiscal gap is a pointless argument when debating an Independent Wales.
The fiscal gap is there because economic and fiscal policies are largely created in London looking at the economy of London and the south east.
There they have massive infrastructure spend, far outsripping the rest of the UK. London receives in the region of £2,500 per head on infrastructure, while Wales it’s a little over £200.
As we noted here,
“London is set to get over ten times the amount of Government spend on infrastructure between 2016/17 and 2020/21 than what Wales will receive.”
And infrastructure spend has a multiplier effect – it brings in new investment and new money.
Wales’ economy is far more dependent on manufacturing while the London economy is dependent to a greater degree on finance. Our tax and fiscal policies reflect the importance of finance, while manufacturing has been run down.
So, duh, of course there’s a significant fiscal gap.
But let’s drill down a little on one element.
The UK’s military budget (or defence expenditure as the Government euphemistically call it) stands at £36bn (this is excluding Trident), which is the equivalent of 2.1% of the UK’s GDP.
Per head this equates to £572.40 for each individual in the UK.
With the population of Wales estimated to be 3,138,631 this equates to a Welsh ‘defence’ spend of £1.8bn.
That’s a lot of money.
First of all, it’s estimated that Wales’ GDP was €80bn in 2017, or £70.4bn on average 2017 exchange rates.
This tells us that the Welsh Military spending is equivalent to 2.55% of our GDP. This would mean that Wales would be the fifth largest spender on military in the world, behind Saudi Arabia, Israel, Russia, USA, and ahead of Turkey, India, France and China as a percentage of our GDP.
It’s also significantly higher than the UK spend.
But how does this compare with others?
Ireland spend in the region of €900m on the military, or 0.3% of their GDP.
If Wales were to spend the same percentage, this would represent £211,200,000. That’s £1.6bn less than our current spend.
Luxembourg spend 0.6% on ‘defence’.
Austria spends 0.7% of its GDP on ‘defence’.
Both Bosnia and Herzegovina and the Czech Republic spend 1.1%.
Denmark and New Zealand stands at 1.2%.
These are all less than half of what Wales spends on the military as part of the UK. If Wales were to follow these (and many others – Iceland officially spends 0%, but it’s coast guard and Airforce of four planes accounts for 0.26% of its GDP) this would release somewhere in the region of £1bn to £1.6bn annually for Wales to spend on other projects.
This is just one example of how different an independent Wales could look, and why it’s unwise (stupid) to claim that the Wales of today, governed by the economic and fiscal policies of a Government with no interest in its well-being, could not afford independence.
Wales could easily afford independence, and would thrive.