‘Game changing’ figures a major boost to case for Wales independence, says Plaid
New research published by Plaid Cymru and undertaken by a leading academic shows that an independent Wales’s fiscal gap would be a fraction of the figure previously reported.
It has been heralded as a “game changer” in the Welsh independence debate by Plaid Cymru Leader Adam Price MS.
The analysis conducted by Professor John Doyle of Dublin’s City University concludes that the fiscal gap in the early days of an independent Wales would be approximately £2.6bn – significantly lower than the frequently quoted figure of £13.5bn.
This is based on the 2019 estimate of total Welsh economic output at £77.5 billion and would be equivalent to just under 3.4% of GDP.
This compares with an average fiscal deficit across all OECD [Organization for Economic Co-operation and Development] countries of 3.2% in 2019.
The fiscal deficit that an independent Wales would face would be normal for comparable countries and in no way presents the major obstacle or impediment which others have sought to present, Plaid Cymru has said.
This has major implications for the debate on the desirability, feasibility and timing of Welsh independence, with the previous assumption that Wales needs to become a stronger economy within the UK before independence can be considered as ‘realistic’.
‘UK accounting exercise’
Professor Doyle, whose work has contributed towards Plaid Cymru’s submission to the Commission on the Constitutional Future of Wales, said: “It is not for me as an Irish academic to advise the people of Wales on their future constitutional choices, but the figure of £13.5bn, frequently quoted as representing the UK government annual subvention to Wales, is a UK accounting exercise, and not a calculation of the fiscal gap that would exist in the early days of an independent Wales.
“The way in which the fiscal gap for Wales is calculated by the UK’s Office for National Statistics is sufficiently clear for a political analysis to determine which aspects of this subvention will be relevant for an independent Wales. My analysis has determined that the figure will be approximately £2.6bn, significantly lower that the figure of £13.4bn, frequently quoted in the media.”
Plaid Cymru Leader Adam Price MS said: “This research further debunks the argument that Wales is too small and too poor to thrive as an independent nation.
“Not only does Professor Doyle’s work further build the body of evidence that supports the case for an independent Wales, it is also a game-changer in the debate surrounding its viability.
“Time and again, we have heard wild estimates about the likely fiscal gap that would exist if we were to become independent that bear no relation to reality. This shows once and for all that ‘fantasy economics’ are peddled by those against not for independence.”
“Independence will also present Wales with the opportunity to improve our economy through policies designed to create a more diversified economic base with more locally owned SMEs, improving productivity and innovation in the private and public sectors, maximising economic benefit through local procurement policies, and investing in the infrastructure of the future.”
Professor Doyle analysed the main components of the fiscal gap – including pensions, UK national debt repayments, and defence spending, together with under-estimates of Wales’s share of tax revenues – and finds that the elements of these that would likely transfer to an independent Wales would amount to approximately £2.6bn.
Professor Doyle concluded: “The economic impact of an independent Wales is therefore not hugely constrained by the existing fiscal situation,” adding: “The classic cautious approach has been to argue that the Welsh economy, Welsh productivity, and Welsh incomes need to grow in order to close the fiscal gap and to make independence more ‘practical’.
“But this is a classic ‘chicken and egg’ argument. What if it is not possible to grow Welsh productivity and the economy without the policy levers available to an independent state?
“For 50 years Welsh GDP per capita, has remained relatively fixed at 75% of UK average GDP per capita, with little sign of the type of convergence seen in Europe between the income levels of EU member states.
“It would take a very radical policy change to make a credible argument that the next 20 years are likely to deliver a different outcome for Wales. It would certainly be worth exploring in some detail, what policy instruments were deployed by small EU member states who have been the beneficiaries of such convergence with wealthier economies.
“The conclusion of my paper is that Wales’s fiscal gap is not sufficiently large to close off the possibility of a viable, independent Wales. The fiscal gap could be closed by relatively modest economic growth, together with a different tax policy. These are the areas where the public debate on the public finances of an independent Wales should focus.
“Economic analysis needs to move on from a focus on the fiscal gap to an exploration of the reasons for that lower economic performance in Wales and the lack of convergence more generally between the different parts of the UK.
“Wales’ geographic position and the decimation of its traditional industries are often offered as explanations, but if geography is a determining factor, why is Wales’s performance, close to that of Northern Ireland rather than the performance of the Republic of Ireland – both more geographically peripheral than Wales?”
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Thanks to Prof Doyle, the Dublin academic for his analysis.Good news for Wales that opens areas of inquiry as to why Wales is mired in its current poverty. It doesn’t need to be this way in the future!
It is evidently clear that Wales needs to take control of its own future. Do we believe in ourselves, or do we wish to put all our eggs into the baskets of Truss and Kwarteng?
Economists are saying the UK was close to collapse yesterday, as nobody wanted the bonds, and the Bank Of England had to buy their own bonds for 65 Billion. Cause was, that no one believes in the UK and lots of people from Europe through India and Africa hate us. ( Kwarteng video’d laughing during the Queens funeral……………..) Whatever, we in Cymru simply have to struggle for survival, whether we like it or not.
If Cymru continues as part of the neo-liberal consensus (doomed though that is, along with humankind’s survival), focused on ‘the fiscal gap’, closely linked to our large neighbour and committed to large-scale trade, then what is the point of independence? Yes, we would escape the incompetence and mendacity of going-nowhere conservative governments (both Tory and Labour) in England. But surely we can do better than that. And must, if we wish to ensure rapid progress towards sustainability. Sovereignty held by the people of Cymru offers the opportunity for real change. That all would share in. High wages and benefits, quality… Read more »
Another tick in the Indy box.👍
Very interesting reading. But I would be more interested to know how independence will come about seeing as Plaid align their independence vision whereas most Welsh people reject the EU. And what about the currency? We wouldn’t be able to use the pound the euro is out of the question. I’m not sure if the thousands upon thousands of middle class public sector workers drunk on their pensions will risk a change in currency. Furthermore with 30pc and upwards of our population coming from elsewhere – mainly England – how will we demographically get independence over the line? Genuine questions… Read more »
Dafydd Siôn, you ask important queries. My comments. A newly independent Cymru should not compromise its sovereignty by rushing to join a trade, regional or military bloc. The Single Market may not be too onerous and has major benefits, but there are objections to the European Union pending its reform. Bilateral trade on a smallish-scale is the sustainable future for Cymru. We should become politically neutral and act pro-actively to advocate environmental protection, disarmament and peace. Although we could use the pound (at least initially, as Dr John Ball says repeatedly), our own currency will be essential from Day One… Read more »
Not too many ifs.
For currency we could just use the mighty dollar:-)
Perhaps a welsh birth certificate only to vote, please don’t shout this is a democratic country. I would argue are we really.
The British government (not England) will continue to pay our pensions because we’ve paid into the pension pot! Also Wales is only liable to pay our proportion of the interest on the UK National Debt (very few countries if any repays its national debt) not to repay the debt.
I understand that the UK told Scotland that they would retain all of the National Debt. There are benefits – especially to the private sector – if the National Debt is retained. It provides liquidity to the rest of the economy. The proposed QT (quantitative tightening) planned for next year would be a retrograde step and should be cancelled. A national debt is one way of securing additional funding for the economy. I would prefer QE (quantitative easing) but distributed to the people (as helicopter money into their bank accounts) not to Big Business and Big Banks (as carried out… Read more »
This is extremely bad new for people, notably in Labour but really everywhere, who claim that Wales can’t afford to be independent. And that we need a London insurance policy. They will have to re-think. My worry is that so many are invested in the status quo that they won’t go through this door which is now being opened. (Thanks Ireland, again!) I remains true that the main obstacle to Welsh Indy is in Welsh minds.
It would be helpful if the article linked to the actual research document. Here it is.
So upon hitting doubters along the March route tomorrow (Cardiff 1/10), use this info. The more people are aware we can survive economically outside the UK the better. Independence is our future.
Any one know where to find the full report? I would like to see what was said about energy and water.
As I’ve always suspected, the British (Eng!ish) establishment has been lying to us all along. They really hate to see the truth come out!!
What amazes me is how the British (English) establishment has got away with lying to us all along. It’s frightening. Haven’t we got expert Welsh people able to keep an eye on our welfare. If we achieve independence we need Welsh leaders with top class qualifications and the ability to run our affairs and finances efficiently. It’s no good going any further without a plan in place. We have to be prepared. I have not heard anyone mention a plan.
What more amazing is you actually think this is a proper evidence-based research report that would be allowed in a proper journal.
Trust me, it wouldn’t.
Its very interesting looking at the comments on anything pro indie on this site- anyone with an opposite view such as me has their comments/points removed very quickly. I do not post anything abusive or insulting just give another view. IF and its a big IF we ever became independent it scares me that we would be ruled by such people who cannot allow a different view and Russia,China and North Korea maybe our role models.
Maybe if you are making fact-free comments such as the above, it’s little wonder!
But your point of view should be heard, if only so it can be answered. Just saying.
Dear NOT Grayham Jones I’m not being impolite but no one posting on here is suggesting we model an independent Wales on North Korea, China or Russia. What they are suggesting (for the most part) is one form or another of social democracy which is about as far removed from China (which is really now just capitalist with an authoritarian government), North Korea (totalitarian) or Russia (imperialist fascist scum) as you can get. If you want to contribute contrary views to the debate please do but don’t misrepresent or dismiss opposing views as ‘Marxist’, ‘North Korean’ etc. when they are… Read more »
Thanks for that however my point was that this site does not appear to allow any comments which disagree with pro Indie articles. The fact anything contary to the popular view is quickly removed by it being voted down is not healthy in a democratic Wales. Perhaps NC need to review this. This sort of thing you would expect in the Countries i previously mentioned but not in Wales.
Interesting report – and encouraging in part. But the headline figure can only be arrived at if the international aid budget is cut in half. In previous estimates, it is assumed that Wales would take on the budget pro rata per head of population. Is cutting this budget Plaid policy now?
And of course the calculated debt mentions nothing about any potential new nuclear sites in Wales – which Adam Price rightly said would add a significant burden to an indy Wales. They should mull that over on Anglesey.
Something very similar happened today that happened to Wales though be it a couple of hundred years ago its still the same Russia today annexed part of a Neutral Country Ukraine ENGLAND ANNEXED ALL OF WALES they have no bloody right it was by conquest not by Mutual agreement like Scotland to suite their own purposes even today a lot of the English still deny Wales is a country only a Principality and our own fellow countrymen want Wales to just be another County of England TREACHEROUS TRAITORS
Why do we need someone from Dublin to do a research for Wales? Haven’t we got somone from Wales able to do this?
It would naturally take an academic from an independent state that has escaped this turd of a ‘union’, one who sits outside the tendrils of the most propagandist state in modern Western Europe, to deliver this report. MournFest ’22 reminded me of the worst excesses, showy-wise, of any authoritarian regime you care to mention. Not to mention the complaisant and collaborationist ‘free’ press pushing the narrative that an entire ‘nation’ was in the throes of intolerable grief. Utterly sickmaking and unbefitting of a supposed 21st century Western democracy.
This is comical nonsense of the best type