Wales

Manufacturing up but Wales' recession recovery slow

Money in till
Image caption It is predicted the Welsh economy will grow at an average of 1.6% a year in the next decade

The Welsh economy is recovering from the recession slower than the rest of the UK - but its manufacturing output grew faster than any other area.

These are the conclusions of two different reports, the first from a report for the UK government, the other by the Office for National Statistics.

New ONS figures also show that gross disposable household income in Wales grew by 48% between 1999 and 2009.

Welsh Secretary Cheryl Gillan said the Budget was part of the solution.

The report for the government, from Experian, says Wales is vulnerable to public spending cuts and has entrenched problems like "worklessness".

David Rosser, director of CBI Wales, said that despite the report's findings, many businesses in Wales were seeing an improvement.

Manufacturing growth

This was reinforced by the ONS figures for manufacturing, published on Wednesday, which show output grew by nearly 5% in 2010 in Wales compared with a year earlier. That compares with a 2% rise across the UK.

However there was a fall of 2.2% in construction in Wales over the same period, compared with a rise of 5.7% across the UK.

Meanwhile new figures show Wales had the third lowest levels of gross disposable household income - the amount of money available for spending and saving - in 2009 in the UK.

Headline gross disposable household income (GDHI) per head in Wales in 2009 was £13,484 or 87.9% of the UK average.

Having declined between 1995 and 1999, this proportion has increased 48% between 2000 and 2009.

West Wales and the valleys have seen an increase of 47.6% in GDHI per head since 1999, and east Wales has a 48.6% increase.

But the Experian report said Wales' share of the economy will also fall, made worse by a reliance on the public sector.

The research cited low skills and entrepreneurism and low opportunities.

The report forecast growth at an average of 1.6% per year over the next decade compared to 2.2% across the UK and said as Wales "fails to keep pace" its share of the UK economy will diminish from 3.5% in 2010 to 3.2% in 2025.

Other challenges include lower entrepreneurism and lower business start-up rates, fewer foreign-owned businesses and fewer businesses exporting than England.

But it highlights more affordable office space and labour and fewer households vulnerable to long-term unemployment and above average growth in sectors such as mechanical engineering, metals, minerals and chemicals and business services.

In the short-term, retailing, hotels and catering would continue to struggle and construction would remain vulnerable.

'Low export rate'

Adam Swash, head of strategy and research for Experian Public Sector which conducted the research, said Wales needed to boost exports.

"One of the weaknesses of Wales is its low export rate," he said.

He said both public and private investment was needed, but warned: "The public purse is fairly bare."

Mrs Gillan said the research "shows the scale of the problem we inherited and also the opportunities available as we set to rebalance the Welsh economy".

"I believe the Budget announced by the chancellor last week is part of the solution," she added.

A Welsh Labour spokesman said: "It serves the Tory-led government very well to be talking Wales down on the eve of the assembly election campaign.

"People in Wales are not looking for analysis from Cheryl Gillan, they are looking for answers."

Plaid Cymru said it was the only party "coming up with creative, radical and innovative ideas to tackle the problems that the nation faces".

The Liberal Democrats' Jenny Randerson said the coalition assembly government between Labour and Plaid had "spent more money on economic development than anywhere else in the UK and we are now the poorest region - and we're falling further behind".

More on this story