Welsh Government sets out its key economic target

It aims to half Wales’s productivity gap with the UK as a whole

The new Plaid Cymru Welsh Government has set a key economic target of halving Wales’ productivity gap with the UK average within a decade.

Latest figures from the ONS show that output per head in Wales is around 85% of the UK level.

The productivity target is seen by the administration as achievable, given that some of the key levers needed to improve output, such as skills and education, are devolved.

However, it will still be a challenge as other nations and regions of the UK will also be seeking to improve their respective productivity rates, with AI a key driver.

Adam Price, Cabinet Minister for Enterprise, Connectivity and Energy, confirmed the target in a statement in the Senedd, saying the new administration of Rhun ap Iorwerth is committed to adopting a different approach, with a goal of bringing to an end generations of low productivity.

The national productivity goal will be delivered in partnership with businesses, trade unions, regional stakeholders and the UK Government, with a specific focus on supporting firms to scale and helping to unlock the “full potential of the Welsh economy.”

Mr Price said: “For too long, Wales has struggled to close the gap with the rest of the UK when it comes to productivity. This target shows our clear commitment to improving the lives of people living in Wales. By focusing on productivity, we will deliver higher pay, stronger businesses and thriving communities.

This goal will give direction to our new Welsh innovation and development agency, shaping how we support businesses, develop skills and invest in the foundations of a stronger, more competitive Welsh economy.

“We are determined to turn ambition into action, creating a stronger, more productive economy that delivers for people in every part of Wales.”

The last Welsh Government economic target, which was later described as only being an aspiration, was set by the former Labour Cardiff Bay administration of Rhodri Morgan, in 2000. It aimed to improved the gross value added per head gap to 90% of the UK average by 2010. However, like today it never improved and continues to languish at around 73%.

To support its productivity drive, the Welsh Government is also committed to conducting an across Wales and sector skills audit, to ensure that its support is meeting the requirements of firms seeking to expand. It is also establishing a new at arm’s length of government national development agency, which will oversee Welsh Government support and inward investment efforts. Mr Price said the precise remit and structure of the organisation is currently being worked , although it will take on business support and inward investment functions. He said it was too early to say when it could become operational. However, it is likely to based on the Transport for Wales model, which as a company of the Welsh Government, has been able to bring to expertise from the private sector.

Details of how the productivity target will be measured and monitored will be announced later in the year with a role for the proposed economic and fiscal commission.