Closing Wales’ fiscal gap will be a huge challenge – whatever the country’s constitutional future, new research concludes.
The report, from academics at Cardiff University’s Wales Governance Centre, assesses Wales’ current financial position as part of the UK, while exploring some of the fiscal implications of Welsh independence.
It concludes that closing that gap – or meeting the ‘levelling up’ ambitions of the UK government – will be extremely difficult, whatever Wales’ ultimate constitutional arrangements.
Researcher Guto Ifan said: “There is currently a gap between Wales’ total spending and its revenue of approximately £4,300 per person, significantly larger than the UK average of £620.
“Wales is by no means unique: the UK is a highly imbalanced state where 9 of the 12 nations and regions have deficits that are funded by ‘fiscal transfers’ from the three ‘surplus’ regions.
“Whatever the UK government’s rhetoric about ‘levelling up’ the UK’s underperforming regions, changing Wales’ economic fortunes, while remaining part of the UK, will require drastic action.
“Fiscal transfers from the rest of the UK are subsidising Wales’ revenue shortfall, but these transfers are not focused on investments – such as high speed rail connections or government-funded research & development – that would enable a turn-around in the relative performance of the Welsh economy and our fiscal position.