Matt Smith: Global Britain is a beacon opportunity for the Welsh economy

Former Welsh Tory candidate Matt Smith wrote the following article for Global Vision UK:

Now that the EU flag outside the Senedd has been run down and the European Commission has left its Caspian Point office in Cardiff Bay, Wales must channel its history as a great trading nation to think radical and go global. 

In 1904, the world’s first £1 million cheque was signed at the Coal Exchange in Cardiff, the coal and shipping metropolis of the world. Back then “black gold” shipped from Cardiff and Barry docks made the Bristol Channel as important to the global fuel economy as the Strait of Hormuz is today.

Brexit allows us to capture the grandeur of our Victorian forebears for two reasons. Firstly, outside the single market and customs union, the Welsh economy will increase its global trade footprint. And secondly, outside the institutions, policies and rules of the Community, governments have more tools to improve the structurally weaker regions of the Welsh economy.  

The advantage Wales will enjoy over the regional units of member states is that through the UK’s sovereign trade policy the Welsh economy will trade more with the rest of the world. 

The Commission says that in the next ten to fifteen years 90% of world growth will come from outside the bloc. Yet the customs union and EU trade policy deflect trade into its member states’ slower economies. 

Welsh exporters have anticipated these changing headwinds. Exports to non-EU countries in the year to June 2019 rose by 8.6%, faster than the 5.7% export growth to EU member states. 

This is not just about sparkling wines from the Wales’ fourteen vineyards, the 2019 World Cheese Award winning Gorwydd Caerphilly or Welsh lamb that US Ambassador Woody Johnson says will be a ‘big seller’ in New York. 

It is also about new markets that will reward the Welsh labour market strengths in aerospace, defence, automotives and pharmaceuticals. Unrestrained by EU protectionism and regulations Welsh workers will gain from trade deals with the faster growing and more populous economies of the world.

The incipient UK-USA trade agreement is only the most high profile opportunity. More transatlantic trade will revitalise the Welsh economy that already enjoys a trade surplus with the United States. A UK-US trade agreement will put Wales’ workforce at the ‘front-of-the-queue’ boosting the Welsh economy by an estimated £154m. 

A larger trade footprint also makes for greater soft power. Soft power is the power of attractiveness (rather than the hard power tools such a defence and trade sanctions). Welsh Government must do more to maximise Wales’ soft power, ranked sixth out of ten comparative subnational regions studied the British Council’s Wales Soft Power Barometer 2018 and four places behind Scotland.

Irish diaspora expert Kingsley Aikens suggested that as few as twenty innovators from the Welsh diaspora could transform Wales’ economy and promote the Welsh Brand stateside and globally. The Welsh Government must do what it can to foster a sense of hiraeth in America for old Cymru.

Higher education is a booster of soft power.  A Vice-chancellor of Cardiff University has suggested the UK should “consider seriously” its own international student exchange programmes to replace the EU’s Erasmus scheme. Brexit will require Welsh universities focus on the whole world “not just the EU”.

Wales also has a successful visitor economy. Wales’ tourism sector has been boosted by the contingent benefits of the lower Sterling exchange rate with nearly a million overseas visitors visiting Wales last year, taking with them a positive experience of Wales.

The economic benefit of Brexit is not only more trade. Taking back control of regional spending, agricultural policy, state aid and procurement will in addition better enable British and Welsh Governments to level-up weaker regions of Wales.

EU regional spending was in need of reform long before Wales’ historic Brexit vote. The Auditor General for Wales has expressed concern about the effectiveness of EU project evaluation. Ending the UK’s net financial contributions will better finance regeneration schemes that reflect local priorities.

Now that the UK’s Shared Prosperity Fund will replace the EU’s bureaucratic Structural Funds projects will be tailored to the interests of communities in need. Decentralisation will empower communities to shape how funds are spent locally. 

Agricultural policy will now prioritise the needs of Welsh farming over continental producers for the first time in over four decades. Free of Common Agricultural Policy red tape, Welsh farmers will lead the world in high-quality agricultural produce and livestock. As a sovereign coastal state we can better shape a new fisheries policy to regenerate and revive coastal communities.

The Conservatives’ General Election manifesto Unleash Wales’ Potential promised a Freeport for Wales with different tax and tariff rules to encourage trade and stimulate economic activity. A Freeport in Wales has the potential to create hundreds of jobs, regional economic growth and encourage entrepreneurialism. 

The UK will break free of EU state aid rules, instead using World Trade Organisation principles to enable rapid response to “economic turbulence”, an important shift in emphasis for an economy with a large manufacturing sector and globally exposed industries. 

Procurement rules will change to support local businesses and foster regional growth. As the former Welsh Secretary David Jones pointed out in Parliament, under a new framework Welsh construction and civil engineering firms should be better placed to bid to win projects. 

Regulatory divergence can better support cutting edge sectors like Wales’ burgeoning life sciences and semi-conductor industries and cut the red tape that burdens the small businesses that form the backbone of the Welsh economy.

William Gladstone said “Rely upon it, the strength of Great Britain… is within the United Kingdom”, not its empire or its prestige. In 2020 it is the world-beating skills of the Welsh workforce, not membership of a supranational bloc, that will win orders and draws inward investment.

True to its global heritage the ‘Dragon spirits’ in Wales’ real economy are soaring high. Let us now seize the valleys of opportunity in the global economy. 

Matt Smith is a Welsh Tory who has stood as a Conservative candidate for Parliament and the National Assembly for Wales. He was a Policy Analyst at Vote Leave. He writes for ConservativeHomeBrexitCentral and Global Vision UK. You can read more about Welsh politics at www.mattsmith.org.uk/news