Welsh economy has 'slowest growth rate', says company

The Welsh government said the firm's report showed 'progress'

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The Welsh economy will struggle to achieve strong growth for the rest of the decade, an economic research company has said.

Capital Economics projects a 2.7% average annual growth up to 2020 compared to 3.8% in the UK as a whole.

It means the future for jobs and prosperity is not as good as the rest of the UK.

The Welsh government said the firm's report shows progress in the Welsh economy.

'Pretty stunning companies'

Start Quote

The public sector is larger in Wales than other parts of the UK which is difficult at a time of austerity ”

End Quote Richard Holt Capital Economics

Richard Holt, the report's author, told BBC Wales: "I wouldn't say {it's} grim but it's kind of not as good as elsewhere.

"The economy I think is genuinely growing and will probably grow faster next year than this year but other parts of the UK are growing faster still.

"Productivity in Wales is lower than in other parts of the UK. The public sector is larger in Wales than other parts of the UK which is difficult at a time of austerity when there's so much pressure to cut the public sector back.

"Wales is also a small economy by the standards of most parts of the UK along with the north east and Northern Ireland. And being small is harder in terms of getting economies of scale and Wales is fairly remote the other centres of the UK economy.

"Transport and infrastructure has to be part of it."

But he added: "It's worth remembering there are some pretty stunning companies in Wales.

"Airbus are doing extraordinarily well and anything they can do to support the growth of suppliers around Airbus is clearly a potentially huge opportunity.

'Impressive examples'

"Tata is doing well, Ford at Bridgend will next year be starting to build a new 1.5 litre engine which they're going to be selling across Europe.

"So there are some very impressive examples and it's a question of what one can do to build on the strengths."

The UK economy grew by 0.6% in the three months to June, according to figures from the Office for National Statistics.

And in July, it was revealed there has been a 191% rise in the number of investments by foreign companies into Wales.

The number of projects went up from 23 to 67 in the last financial year.

The Welsh government said the report shows the good progress the economy of Wales is making.

"Since devolution not only have we seen greater growth in employment in Wales than in England, but Wales has had larger gains in private sector employment and smaller increases in public sector employment than England," a spokesperson said.

"Despite cuts to our budgets imposed by the UK government, our unrelenting focus is on supporting economic growth and creation of high quality jobs in Wales.

"For example, this week we announced a programme of capital investment that will create 11,000 jobs."

The capital investment, worth in total more than £600m, includes £62m for the South Wales Metro transport project and £140m for a help-to-buy housing scheme.

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