Saturday, January 1, 2011
REFLECTIONS ON 2010
More relevantly, as today is the first day of 2011, it is a good time to look back at the economic events of the last twelve months.
In January 2010, there could be no doubt that the Welsh economy had been hit hard during the recession of the previous year.
Statistics would later show that whilst the public sector was largely protected from the worst ravages of the economic downturn, over 88,000 jobs were lost in the private sector across Wales.
Perhaps the biggest symbol of the inability of politicians in Wales to plan properly for the fallout from the changing state of the global economy was the news that Bosch was to close its South Wales plant with the loss of 900 jobs, with hundreds more lost through the supply chain of small local companies.
For a number of years, some of us had been urging the Welsh Assembly Government to create strong relationships with the major employers across Wales, and yet again, the politicians were left to bemoan the loss of another major employer by trying to shut the gate after the horse had bolted.
One can only hope that the Bosch episode finally hammered home the importance of having regular dialogue with the five hundred major inward investment companies that currently account for almost a third of employment in all large businesses in Wales.
Whilst tens of thousands of jobs were being lost across businesses in Wales, those working within the bowels of the Department of Economy and Transport were busily preparing the government’s new economic strategy.
Widely heralded as ending the grant culture even before it went out to consultation with business, this “Economic Renewal Programme” promised to re-energise the Welsh economy, a promise that politicians have been making since the Assembly was born in 1999.
The regular readers of this blog will know my views on a strategy that clearly did not reflect the views of the business community and offered little empirical evidence back to its conclusions. Indeed, most of the strategy now seems to be predicated on abandoning business support and funding at a time when small firms need every help they can get and instead using this money “saved” to pay for superfast broadband across the country.
The jury remains out as to whether the new economic renewal programme will work or not, but given that the Director General of the Department of Economy and Transport has been sent to Anglesey by his Minister, it doesn’t exactly show confidence in those officials who devised the strategy in the first place. Indeed, much work remains to be done by those replacing him to persuade the private sector that government in Wales is really on its side.
The highlight of my year was, without doubt, the hour I spent with Michael Moritz at his Sequoia Capital headquarters in California. Being the Welshman who invested in companies such as Yahoo, Google and YouTube, the 60 minute meeting was an opportunity to learn from someone who is widely seen as one of the leading gurus of the internet age.
And what was Cardiff born Moritz’s simple message to Wales?
It was one of encouraging the import of global scientific talent whilst, at the same time, providing the resources necessary at the primary and secondary school level to nurture the home grown scientists, engineers and technologists of the future. i.e. if you nurture, develop and attract young talent within science, engineering and technology and surely as day follows night, venture capital will follow that talent to create the industries of the future.
Yet, there is little evidence of this approach being embraced by either the public or the private sector in Wales. Given the spectre of increased youth unemployment across the nation over the next few years, it is a message that politicians at both Westminster and Cardiff Bay should begin to take seriously over the coming months.
The end of the year saw the ritual round of reports stating that Wales remained firmly at the bottom of the prosperity league table.
Given the fact that the first Assembly Government had set a target to increase Wales to 90 per cent of the UK’s prosperity by 2010, the fact that Wales remains at 74 per cent in 2009 demonstrates that successive governments have simply failed to utilise the economic levers at its disposal along with billions of pounds of additional European funding.
After twelve years of devolution, our competitiveness remains the worst of any British region, we have the lowest number of new business starts, the R and D spending by private sector companies remain pitifully inadequate, and we have the smallest proportion of exporting companies in the UK.
One can only hope, with the fourth Assembly election looming in May 2011, that the political parties will finally say enough is enough and finally begin to ask some serious questions over the ability of the Welsh economy to grow and develop and their role in enabling this.
Our over-dependence, relative to other UK regions, on the public sector at a time of government cutbacks will mean that we will need private firms, both large and small, to take on the burden of growing the Welsh economy.
The question is whether, after the abject economic performance since 1999 that has seen the worst growth record of any UK region, there we will finally see a radical set of policies put forward by the main political parties during the next four months, policies that can transform this nation.
For the sake of Wales, one can only hope so as we need a new approach that encourages entrepreneurship and innovation to create a flourishing economy that is driven by the skills and talents of its people.