The latest GVA figures show the Welsh economy has become the first in the UK to return to its pre-pandemic size despite extra restrictions - but the challenge remains to close the historic gap with other parts of Britain.
Gross value added in Wales grew 0.9% in the fourth quarter of 2021, returning output to where it was at the end of 2019, according to modeled-based early estimates from the Office for National Statistics.
Meanwhile Scotland’s economy remains 5% behind where it was before the pandemic started and the West Midlands is still nearly 10% down.
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While this is positive news it is in the context that GVA per head in Wales in 2019 was 72.6% of the UK figure, the second lowest of the UK countries and English regions.
The drive now is to close that gap at the same time as the nation and wider global economy faces rising costs and now the fallout from Russia’s invasion of the Ukraine.
Bangor University economics lecturer Dr Edward Jones, said he wasn’t surprised Wales had recovered at a faster rate than the rest of the UK.
He said: “When you look at the Spanish Flu all the evidence showed that the economies that shutdown the hardest performed better than areas that didn’t once the economies were opened up.
“This could come from the greater confidence in the population once things open up, people feel safe to go out and businesses feel confident.
“Wales has also really benefitted from tourism after the economy opened up so this could also be a factor.
“But while this is great news we have to recognise there are a lot of economic challenges to face. We already had a problem with inflation and that was before the conflict in Ukraine.”
Ian Price, CBI Wales Director, said: “Indications that the Welsh economy is recovering are welcome and can hopefully act as a springboard for confidence.
“However, with a cost-of-living crisis still ongoing, demand not yet back to pre-pandemic levels and shortages continuing to affect businesses of all sectors, firms will be wary of getting ahead of themselves for the time being.”
A Welsh Government spokesperson said: “Since the start of the pandemic, the Welsh Government has pulled every lever possible to back Welsh businesses. We reprioritised our budgets and repurposed funding to make sure financial support was available where it is needed most – and quickly.
“We’ve provided in excess of £2.6bn funding to Welsh businesses, in a package that has been designed to complement and build on the support provided by the UK Government. This has helped protect in excess of 160,000 Welsh jobs which might otherwise have been lost. We’ve also extended our 100% business rate relief package for retail, hospitality and leisure businesses until the end of this financial year.
“Our economy has emerged from an unprecedented downturn due to the pandemic.
“However, we remain concerned by the ongoing the cost-of-living crisis and will do all we can to support families and business as we build a stronger and more resilient economy.”
