Leanne Wood is fond of saying
nowadays that “Independence won’t happen
tomorrow”. And probably with good reason. For those of us who support Welsh
Independence, the harsh reality is that if by some act of constitutional magic,
Wales did become Independent tomorrow, we’d have a hell of a budget deficit. The
Holtham Report, commissioned under the “One Wales” agreement, identified a difference
of £6 billion between tax raised in Wales, and total public spending. Many
senior figures in Plaid are well probably well aware of this figure, which is
why the Independence genie, having popped out of the bottle, refuses to grant
us the wish closest to our hearts. Independence has become a distant oasis in
the economic desert.
Except that it’s not quite that
simple. For the surprising and somewhat perverse reality is that although our
public finances would be in a pretty dire state, an Independent Wales would
also start life with quite a tidy trade surplus, something on the order of £5billion if the most recent figures are anything to go by. Why? Because after
decades of globalisation and de-industrialisation, Wales still has something
that many Western countries at the start of the 21st century now
lack – a good manufacturing base, in our case accounting for something like 16%
of Welsh GDP.
So even though the UK as a whole runs
a trade deficit, taking Wales out of the UK equation means that, as Neil
Kinnock once put it so eloquently, we’re alright.
In fact, taking Welsh manufacturing
out of the strait-jacket of the Union takes us on an interesting journey, but
it also raises questions about what kind of meaningful industrial policy Plaid Cymru
in particular can formulate while it’s still sucking on the comfort blanket of
Devolution. For power devolved, as Enoch Powell once put it, is power retained,
and Devolved economics is still economics that works in a Unionist framework.
From a manufacturing perspective, few
companies illustrate the nature of the strait-jacket posed by the Union as well
as the operations of TATA Steel in Wales. If we wanted a clearer illustration
of how the UK economy is designed to benefit the banksters running the City of
London, while militating against what could well evolve into the engine of
Welsh Independence, look no further.
Let’s look at a few facts.
TATA is Wales’ largest manufacturer.
The Jewel in its crown is the massive works at Port Talbot - hosting the UK’s
largest integrated steel plant, and accounting for anything up to half of all
UK production of Steel. TATA in Wales employs around 8000 staff directly and is
estimated to contribute around £2.5 billion to the Welsh economy.
Yet like all manufacturers, its
export focus makes it vulnerable to fluctuations in the UK Pound. Given that
manufacturing accounts for a bigger proportion of the Welsh economy than other
parts of the UK, it’s reasonable to conclude that a strong Pound is going to
hurt the Welsh economy disproportionately, or as one despairing Welsh steel
worker put it a long time ago “Why does it always happen to us?”
Which all begs the question – if the
strong Pound is such a problem for Welsh manufacturers – why bother with it?
Of course, the virtues of retaining the Pound as a
currency has been more of a preoccupation for our Scottish cousins north of the
Border. But given the fact that Wales’ manufacturing sector is still such a
meaningful element of our economy, maybe we should start thinking outside of
the box and start asking whether we too would be well served by a currency of
our own.
In Scotland, the SNP’s strategy to
reassure “swithering” undecided voters was to propose a currency union with
England. There are those who argue, however, that this strategy does no favours
to Scottish manufacturers as it continues to shackle them to the strong Pound.
This has a two-fold impact on Scottish and by extension Welsh industries –
firstly, it helps destroy our manufacturing bases by rendering them
uncompetitive internationally. And secondly, and more insidiously, it feeds
dependency on the one market that can conveniently still afford to buy Scottish
and Welsh goods because they are denominated in the same currency – England.
Funny how it works out like that, eh?
We’re all well aware of the SNP’s
riposte to the Treasury’s bluster and threats not to “share” the pound. “If you’re not prepared to share the assets,
we won’t share in the liabilities”. An Independent Scotland would simply
walk away from its share of the UK debt. From a Welsh point of view, walking
away from the pound and walking away from the massive debt burden that the UK’s
out-of-control financial system has lumbered us with doesn’t look like a bad
call.
Similar threats by the UK Treasury to
Wales can then be met by the simple reply: fine by us!
