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The economic basis for Welsh independence: part one

The UK Government is usually careful to consider Scottish opinion when making sensitive policy decisions, treating Scotland with kid gloves for fear of inflaming nationalist sentiment. Support for Scottish independence remains at a tipping point. It wouldn’t take much for Scotland to take its final step towards the international community of sovereign nation states.

Wales, on the other hand, is usually ignored by the UK Government. It has never been regarded as a threat to the integrity of the UK in the same way Scotland has. This puts Wales on the receiving end of unfair and inequitable decisions, the most recent examples being HS2 funding, devolution of policing, and receipt of Crown Estate revenue. The contrast between Wales and Scotland couldn’t be clearer.

Support for Welsh independence

This distinction is beginning to change with a surge in support for Welsh independence. Until around 10 years ago, opinion polls showed support lodged at 5–10%. It was generally considered as limited to a ‘nationalist fringe’ and ‘language fanatics’. But the 2014 Scottish independence referendum raised the profile of independence, not only in Scotland, but also in Wales. Support for Welsh independence crept up to around 14%.

Through the referendum process, Scotland was able to have a detailed and open discussion about the pros and cons of independence. Many of the arguments made were equally applicable to Wales. The Scottish campaign seemed to awaken some belief that, if independence was good enough for the Scots, it was good enough for the Welsh.

In the aftermath of the failed Scottish referendum, the campaign group YesCymru was established to make the case for Welsh independence. Membership grew steadily as opinion polls registered a jump in support to a respectable 20–25%. We can argue whether the growth of YesCymru led to increased support for independence or vice versa, but either way it was clear Welsh independence was moving higher on the political agenda.

The Covid emergency from 2020 led to another surge in support. This was partly in reaction to the different ways in which the UK and Welsh governments reacted. People realised there wasn’t a single solution – that we could, and should, adopt policies better suited to Wales. Covid demonstrated that Welsh devolution was real and we were already governed differently from England, even to the point of being able to temporarily establish border controls.

So support jumped again, to 30–35%, and the independence movement moved into the mainstream. Plaid Cymru truly embraced independence after years of ambivalence, and even a Welsh Labour independence group was established.

Bridging the gap

Much of the increase in support so far has been driven by emotions – there was very little data or analysis to show what Welsh independence would mean in practice. In particular, how it would affect people’s pockets. Could we afford independence?

As with the Scottish debate, unionists were quick to rubbish independence using selective and inaccurate data. A favoured claim is that Wales receives a ‘subsidy’ of £18bn each year – a handout from the UK Government – while conveniently forgetting this is largely a return of taxes collected from Wales. Meanwhile, the UK Government spends money ‘on our behalf’ and sends us the bill, despite there being little or no return for Wales. The HS2 debacle is only the latest and most high-profile example.

There was a massive disinformation exercise during the unsuccessful Scottish referendum campaign, and we need to be prepared for more of the same directed at Wales. The biggest challenge we’ll face is how to counter fictitious claims. Where can supporters of independence find objective and factual data to dispute misinformation and support their cause?

Support for Welsh independence has probably plateaued at around 35%, as emotional arguments can only take it so far. There are many potential supporters who remain doubtful about the economic case for independence. We’ll never convince everyone, but we don’t need to. We don’t need to achieve 100% support to reach independence, but must comfortably pass 50% before considering a referendum. (Not that we necessarily need one – but >that’s another discussion).

To reach such a majority, we must be able to dispute unionist claims that we’re too small and too poor to support ourselves, and back this up with solid, objective data.

Big enough for independence

Let’s first consider the physical size of Wales. It covers an area of 21,218 km2 (8,192 square miles). In a league table of sovereign countries it’d be in 148th place, just ahead of Israel. It’d be larger in land area than 48 independent countries. In a European context, it’d be bigger than four independent members of the European Union – Cyprus, Luxembourg, Malta, and Slovenia.

But physical size is unimportant if nobody lives there. Considering its people, Wales had a population of 3,107,494 in 2021. In an international league table it’d be 134th, just ahead of Namibia, and larger in population than 60 independent countries. In comparison to the EU it’d be larger than seven member states – Cyprus, Estonia, Latvia, Lithuania, Luxembourg, Malta, and Slovenia.

So while Wales may be relatively small, geographically speaking, it’s clearly not too small, as evidenced by the large number of even smaller independent countries. And size isn’t everything. Geography and population are arguably less important than economic heft.

Rich enough for Welsh independence

There are a number of measures of economic size, with Gross Domestic Product (GDP) being most commonly used. This is an estimate of the market value of all goods and services produced in that country. It’s usually expressed on a nominal basis, but can also be expressed as purchasing power parity (PPP), which takes cost of living into account.

In 2022 the nominal GDP of Wales was estimated at £85.4bn. In a league table of sovereign nations it’d be ranked 66th, just above oil-rich Oman. It’d be higher in GDP than 130 independent countries. And it’d be ahead of eight independent EU members, including Croatia and Luxembourg.

Total GDP is limited by its relatively small population. Individual wealth is measured by GDP per capita – how much wealth each person produces. In 2022 this was estimated at £27,274. Yet this would put Wales 30th globally, just ahead of Taiwan and better-off than 165 independent nations. In Europe it’d actually place ahead of 14 member states, including Portugal and Spain!

I don’t have complete data on PPP, but am certain Wales’s cost of living is lower than its immediate neighbours, which would improve its position further. And the GDP figures quoted are based on UK Government data, which is incomplete and masks some of Wales’s wealth; more on this in a future article.

Relative size

No, Wales isn’t as big or rich as its immediate neighbours. But nobody is claiming it’s as big as the UK – the world’s seventh largest economy – or as rich as Ireland, which has one of the highest GDPs per capita in Europe.

However, this doesn’t mean Wales isn’t big or rich enough to be independent. Nobody argues that Israel, Spain, or Taiwan are too small or too poor to be independent. So what’s so unique about Wales that would make it so?

And if we take the examples of Ireland or Singapore – both ridiculed at the time of their independence as being unsustainable – there’s no reason Wales’s economy shouldn’t flourish once it got out from under the dead hand of Westminster control.

But while Wales is clearly rich enough on paper to be independent, would it be solvent, able to balance tax revenues against public spending? >Part two considers, among other things, whether Welsh independence means paying our way without UK ‘subsidy’.

Michael Murphy, YesCymru Director

(This article was originally published on bylines.cymru)

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