Economy of Wales
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The Economy of Wales. In 2004, according to ONS provisional data, headline Gross Value Added in Wales was £39,243m, making the Welsh economy the tenth largest of the UK's twelve 'regions' (counting Wales, Scotland and Northern Ireland alongside the nine English Government Office Regions). It is also ranks as the 43rd largest economy in the world. The modern Welsh economy is dominated by the service sector. In 2000, services contributed 66% to GVA. The manufacturing sector contributed 32%, whilst Agriculture, forestry and fishing contributed 1.5%.
Economic output per head has been lower in Wales than in other parts of the UK (and most other parts of Western Europe) for a very long time - in 2002 it stood at 90% of the EU25 average and around 80% of the UK average. However, care is needed in interpreting these data, since regional GDP/GVA per head data in the UK does not take account of regional differences in the cost of living, which in Wales is estimated to be 93-94% of the UK average. Thus the gap in real living standards between Wales and more prosperous parts of the UK is not pronounced.[1]
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[edit] Economic sectors
[edit] Services
In recent years, the service sector in Wales has seen above average growth compared with the rest of the UK. Swansea, Newport and, in particular, Cardiff are centres for retail, hotels and restaurants, financial and business services, with Cardiff enjoying significant growth in recent years. However, Wales does not have a favourable occupational structure and in particular lacks high-value added service sector employment.[2] A relatively high proportion of service sector jobs in Wales are in the non-productive public sector: public administration, health and education.[3]
With its mountainous landscape and numerous sandy beaches, Wales has always attracted much tourism. In 2002, nearly 13 million trips of one night or more were made in Wales, generating expenditure of £1.8 billion. 11.9 million of these trips were made by UK residents with 0.9 million coming from overseas.
[edit] Manufacturing
Wales has a diverse manufacturing sector. Heavy industry, once a mainstay of the Welsh economy has largely been in decline over the past century but is still very apparent. Milford Haven has two oil refineries which represent around a fifth of United Kingdom capacity. Metal ore refining is a long established industry in Wales. Nearly all the tinplate and much of the aluminium of sheet steel products in the UK are produced in Welsh plants. Much of the ore is now imported and some of the metal produced is re-exported.
Wales is an important producer of automotive components: Ford has a major engine plant at Bridgend; Borg Warner has a major components plant in Kenfig, South Wales; and Visteon (previously Ford) has a large transmission components plant near Swansea.
During the 1980s and 1990s, a major growth sector in manufacturing is the electronics industry with over 130 North American and 35 Japanese companies having operations in Wales. Welsh manufacturing is noted for its high productivity. However, research and development activity in this sector is relatively scarce. Most of the research and development activity focuses on cost reduction rather than new product development and design.
[edit] Agriculture, forestry and fishing
Approximately 80% of the land in Wales in used for agriculture. With its grassy and hilly terrain, livestock farming is more common than crop cultivation. Wales is famous for its sheep, of which there is a population of more than 10 million, outnumbering the human population of more than three to one. Cattle farming for beef and dairy products is also common. About 13% of the land is covered by forestry and woodland. Wales's fishing industry is concentrated mainly along the Bristol Channel. Agriculture, forestry and fishing only contributes to 1.5 % of the economy.
[edit] Regional variations
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Average earnings and employment vary considerably across Wales. Employment is high in east Wales, and outside Powys earnings in this region are relatively high compared to the Welsh average. In south west Wales and the Valleys, both employment and wages are generally lower, with the exception of pay in Bridgend and Neath Port Talbot (which have a substantial number of skilled manufacturing jobs). Earnings are relatively low in north and north west Wales but the employment rates here are above the Welsh average.
A significant part of the earnings (and value-added per job) variations within Wales are due to structural factors such as economic mass and occupational mix rather than like-for-like lower pay or productivity. Cardiff, with 320,000 people, has been developing as a significant centre of service sector employment over recent decades, and benefits from its capital status, a hinterland in south east Wales and good connections to London and south east England. North east Wales benefits from proximity to Cheshire, Greater Manchester and Merseyside, and there is significant cross-border commuting. The western regions of Wales have less economic mass and are distant from major economic centres. These are some of the poorest regions in Europe and qualify for Objective One funding.
The South Wales Valleys have long been an economic blackspot. A continuous decline in heavy industry over the 20th Century left the region suffering from relatively high unemployment. Although unemployment has declined in recent years, rates in the Valleys still tend to be higher than the Welsh average, and economic inactivity (a form of hidden unemployment) continues to be a major problem in these areas: Merthyr Tydfil and Neath Port Talbot have some of the largest proportions of people in the UK not working due to long-term illness or disability.[4]
[edit] Property
The Halifax bank reported in the 3rd quarter of 2005, that the average house price in Wales is £149,464 compared with a UK average of £166,074. Wales saw an annual house inflation figure of 5.3% compared with 3.0% for the rest of the UK. Over the last ten years, house prices have risen by 201% in Wales. In Q3 2002, Greater London prices were 2.7 times higher than in Wales; now they are just 1.7 times higher. The fastest price rises occurred in Port Talbot where a 35% increase was reported. [5]
[edit] Transport infrastructure
- See also: Transport in Wales
In 2003, Wales has 83 miles (133 kilometres) of motorways. The M4 motorway, which terminates near Pontarddulais, serves major southern Welsh towns and cities like Swansea, Neath, Port Talbot, Bridgend, Cardiff and Newport. The M4 connects Wales with England at the Second Severn Crossing, linking to the M5 and M25 and passing Bristol, Swindon, Reading, Slough, and Heathrow Airport, starting at the A4 in West London. An older motorway bridge, the M48 Severn Bridge, crosses the river at Chepstow. North Wales is served by the A55 'expressway' trunk road. There are only 2 railway lines with intercity express trains, following the north coast and south coast respectively. The Great Western Line serving south Wales crosses the Severn via the Severn Tunnel.
Due to the mountainous terrain of mid Wales, north-south transport is difficult. There are only a few trunk roads and railway lines and many travellers find it easier to travel via England to move north-south. Generally traffic between north and south Wales is modest. The main north-south railway line in central Wales is the Heart of Wales Line. The A483 and A470 are the main north-south roads route in central Wales.
Milford Haven has the largest port in Wales. It is also the fifth largest in the United Kingdom and contains a significant oil and natural gas terminal. Major liquid natural gas facilities are under construction here. The other major Welsh ports are Swansea, Port Talbot, Barry, Cardiff, Newport and Holyhead. Cargo handled at these includes coal, iron ore, timber, scrap metal and other dry bulk industrial material. There are regular ferry services to Ireland from Fishguard, Pembroke Dock, Swansea and Holyhead.
As of 2005, Cardiff International Airport is the only airport offering scheduled flights in Wales. It handled around 2 million passengers in 2005.
[edit] Economic history
During the 19th century, coal mining and heavy industry dominated the South Wales economy. Thin strips of coal were first found in the 19th century. These were easy to get to because they were close to the surface as they were in valleys. When steel was invented, some of the coal was used to make it, as well as being sold as just a resource.
Hundreds of coal mines and steel factories were set up to harness the supplies that were in great need around the world. The main factors of South Wales' exceptional success were:
- A lot of supplies
- A guaranteed market
- One of the first areas to industrialise
[edit] Supplies
The amount of coal in South Wales covered a space larger than that of London at the time. Because Britain was in an industrial age, the coal could easily be harnessed. The coal was mainly located in valleys, which meant that it was very close to the surface, and therefore easily to get to. Thousands of men from all over the country relocated to South Wales, as there was a great deal of work for them. The methods used to get the coal were basic - men with pickaxes. However, because there was such a large amount and such a high demand for the coal, the methods didn’t prove to be a setback.
[edit] Market
At the time of the boom of coal mining in South Wales, Britain had the largest land empire the world has ever seen. Because of this, Britain had a guaranteed market for the coal and steel, as many of countries that were part of the Empire were forced to buy it. A large amount of the steel produced was sold to India, which built the vast number of railway lines throughout British India.
[edit] The First
Britain was the first industrialised country in the world, and was the first to discover such large deposits of coal. This meant that Britain, at one time, made up all of the coal market worldwide. This lead to increased sales and more revenue.
[edit] See also
[edit] References
- ^ http://www.wales.gov.uk/subitradeindustry/content/wave/wave-part5-e.pdf
- ^ http://www.iwa.org.uk/publications/pdfs/Hodgelecture05.pdf
- ^ http://www.statswales.wales.gov.uk/TableViewer/tableView.aspx?ReportId=1526
- ^ http://www.wales.gov.uk/subitradeindustry/content/wave/wave-e.htm
- ^ Halifax House Price Index - Third Quarter 2005
