Is Wales too small or too poor to be independent?

Mike Hedges responds to Dr John Ball’s recent article on the economic arguments for and against an independent Wales

Mike Hedges is Assembly Member for Swansea East

John Ball has raised two questions about Wales on whether it is too small and too poor to become Independent, most recently on click on wales on 25th January  “Is Wales too poor to become independent”?

 

The United Kingdom is the 21st largest country in the world sandwiched in size between Thailand and France.

 

If Wales was an independent country it would be the 137th largest country sandwiched in size between Mongolia and Uruguay.

 

If Swansea Bay City Region was an independent country it would be the 166th largest country sandwiched in size between Guyana and Montenegro.

 

Finally if Swansea was an independent country it would be the 187th largest country in the World with 46 smaller countries.

 

So each of the above options are feasible in terms of population.

 

Turning to GVA. We know two things.

 

Only London and the south east of England are net contributors to the UK treasury according to published figures. We know that the GVA of the United Kingdom is £26,300 per capita and that of Wales £19,100 per capita leaving a gap of £7,200 per person.

 

We also know that the GVA per capita of many countries including some in Europe is lower than that of Wales and also that of the Swansea city region. So why having identified that Wales is neither too small or too poor to be independent do I oppose independence?

 

The reason is straightforward on both tax receipts and GVA: an independent Wales would be poorer with a combination of higher taxes and poorer public services. I did not stand for election to make my constituents poorer and I believe strongly in the redistributive funding method that exists in the United Kingdom.

 

What we have seen with Brexit is that there is a hard and soft split. A soft split from the UK would involve a customs union, free trade, free movement of people which implies common immigration rules, common welfare benefits, a currency union, common VAT, “sin” taxes, and allowing the Bank of England to act as the central bank. Under this scenario the only things that would change would be that an independent Wales would have a lower income from taxes and either poorer public services or higher income tax or a combination of both, but we would have a seat at the United Nations.

 

A hard split from the UK would involve a hard border, no customs union, no free movement of people, a new Welsh currency and central bank and full control over taxes.  Trade with England would be on World Trade Organisation terms but again with a seat at the United Nations. If leaving the European Union on such terms would be against our interests leaving a union with the rest of the UK on such terms would be catastrophic.

 

There are also additional costs with creating a new country such as embassies across the world, creating foreign policy and defence against terrorist attacks which will all be greater than we currently pay as our UK share.

 

Whilst there are non-economic arguments against leaving the UK, otherwise London would set itself up as a city state, I have not addressed them here.  I have attempted to answer John Ball’s two questions: we are not poor or too small, but we would be a lot poorer than we are now if we had independence.

All articles published on Click on Wales are subject to IWA’s disclaimer.

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