The Welsh economy will grow at one of the slowest rates of any part of the 海角视频 next year, with poor productivity remaining a major issue, according to new research from professional advisory firm PwC.
Its 海角视频 Economic Outlook research predicts the Welsh economy will grow by just 1% this year and fall back slightly in 2020 with a meagre growth rate of just 0.8%.
The projections for Wales are among the lowest for any nation or region in the 海角视频, joined by Northern Ireland and the north east at the bottom of the rankings.
For the 海角视频 as a whole PwC is projecting the economy will grow by around 1.2% in 2019 and 1% in 2020 - significantly below its long-term average growth rate of around 2%.While its growth rate is sluggish, the bigger issue for the Welsh economy, says PwC, is addressing low productivity.
Output per job in Wales is the lowest in the 海角视频 at £44,780, some 18% under the 海角视频 as a whole at £54.330.
For London it is 40% higher than the 海角视频 average at £77.125.
John-Paul Barker, regional leader for PwC in Wales and the west of England, said: “In terms of growth, Wales suffers from having a greater reliance on manufacturing than many regions. This has been adversely affected by global trade tensions and the slowdown in Eurozone growth. But the productivity issue faced by the country is a longer-term challenge.
“Wales needs the combined power of local and central government plus business to deliver more investment in skills and infrastructure. The upside of tackling this productivity problem is huge: if those areas performing below the 海角视频 average can close 50% of the gap in productivity performance with the 海角视频 median, it could boost 海角视频 GVA by around £83bn equivalent to nearly 4% of GDP. Wales would see the second-largest percentage increase of 10.7%.”
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The report suggests a number of strategies that could be employed to help boost productivity across the 海角视频. Notably, businesses could promote workplace training and upskilling, a recommendation that is reinforced by PwC’s recent global skills survey, which showed that the desire of 海角视频 employees to learn new skills is not being met by employers.
In addition, investment in local infrastructure could boost connectivity (and therefore productivity).
Ben Cottam, head of external affairs for FSB Wales, says the findings are disappointing, but the particular challenges of productivity within the Welsh economy are long-standing.
Mr Cottam added:“The Welsh economy has obviously undergone a significant shift away from heavy industry and this transition is difficult for businesses and communities.
“However, Wales is blessed with a wealth of dynamic smaller businesses and the conversation about boosting productivity needs to focus more on understanding and responding to these businesses and their needs.
“Responsive, future-proofed infrastructure is one the essential ingredients in boosting SME productivity and joining economies, particularly in rural areas. Only when we start to tackle these strategic issues can we expect to see a significant upturn in productivity in Wales. This is why FSB Wales recently released an important report which looks at the imperatives for infrastructure in Wales to develop our economy."
Ian Price, director of CBI Wales, added: “Productivity may not be politically fashionable but a sustained improvement in macroeconomic leavers - like road infrastructure - and microeconomic leavers - like firm-level management training - will deliver a sizeable return to Wales in the shape of a more prosperous and competitive nation.
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“The 海角视频 government and Welsh Government should pay close attention to these findings and recommit to working together to tackle our nation’s low productivity problem head on. “
John Hawksworth, chief economist at PwC said: “Places that are better connected physically and have access to skilled workers tend to have higher productivity levels. We find, for example, that a 1% increase in skills is associated with a 2% increase in productivity in a local area.”
A Welsh Government spokesperson said: "Despite a decade of austerity, there are now 260,000 more people in work in Wales than in 1999; more businesses in Wales than ever before and the proportion of working-age people with no qualifications has more than halved. For the first time in history, economic inactivity rates in Wales are broadly comparable with the 海角视频 average and GVA per hour worked is growing at the fastest level in the 海角视频.
"We are investing in key drivers of productivity and through our Economic Action Plan and Fair Work agenda, we are investing in a more productive workforce.
"We have an opportunity to work smartly and collectively in Wales to drive prosperity in all areas of the country for all people."
Figures released last week from the ONS showed last year firms in Wales spent £430m on R&D in 2018 - the lowest of any nation or region of the 海角视频.
This placed Wales behind the North East of England at £443m and Northern Ireland at £524m.
For Scotland it was £1.2bn, which was down 0.6% on 2017.
For the 海角视频 as whole R&D expenditure for firms rose 5.8% to just over £25bn. In Wales the year-on-year rise was 2.1%, or £9m.
Employment levels followed the same pattern, with 222,000 full-time equivalents (FTEs) employed in R&D in England, 14,000 in Scotland, 8,000 in Northern Ireland and 6,000 in Wales.