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Grim outlook for 2019

January 3rd 2019

Victoria Winckler reflects on the Bevan Foundation’s outlook for 2019, published on 1st January.

The champagne is drunk, the fireworks crashed to earth and resolutions made. What does the rest of 2019 hold for Wales? The outlook for the next 12 months, set out in our special State of Wales briefing, has probably been the toughest yet to compile.

Yes, there have been the usual sources of expert forecasts on which we have drawn, ranging from the sober Office for Budget Responsibility and OECD analyses, to those produced by the big accountancy practices, business organisations and some think tanks too. But every single one has struggled to chart a course given the uncertainty of Brexit and the wider political scene. Almost all have assumed a smooth, orderly or agreement-based Brexit in making their forecasts. Almost none have dared anticipate what a no-deal Brexit could mean.

Even with these increasingly optimistic assumptions, 2019 looks challenging.

 

The infographic on the right shows the headline findings of our report. What’s clear is that the economy and labour market are likely to continue to bump along the bottom. At best there will be very modest growth in GVA and employment.

However, the benefits of what growth there is looks unlikely to reach all people and all parts of Wales.

There’re very modest increases in wages forecast but any gains will be all too quickly offset by increases in the cost of living, from food and train fares to rent and energy bills. And for people at the bottom of the income spectrum, 2019 looks even tougher with frozen benefit rates struggling to cover essentials.

No wonder, then, that poverty rates are forecast to rise. But headline rates only capture part of the story. We anticipate that poverty will also deepen, with more and more people not having the basics of a roof over their heads, food on their plate or hygiene products and warm clothes. Tough times indeed.

Not everything is affected by Brexit.

At least in the short term, we can be fairly confident about social trends in the year ahead. It’s expected that births will very slightly outnumber deaths over the year, resulting in a small natural increase in population. There’ll be a much bigger net increase of around 9-10,000 as people move to and from Wales.

Irrespective of population change, there will be continued pressure on public services. Whether it is ambulances queuing outside A&E or Wales’ performance in PISA tests, we can expect continuing negative headlines in the media and testy debates in the Senedd.

Political Uncertainty

All of these pressures come amidst huge political uncertainty. Brexit is merely 13 weeks away and the PM enjoys the support of just 200 out of 650 MPs. Who knows if there’ll be a 2nd referendum, general election or new leader of the Conservatives?

Closer to home, at least we know there’s a new FM and the make up of his cabinet. But Mark Drakeford’s recognition in Wales seems low, and it remains to be seen whether he can deliver his manifesto commitments still less if they will make much difference to voters.

We would like nothing more than for our bleak forecasts to be proved wrong.

How good it would be if the valleys were booming, if youth unemployment fell to just 4% from its high of nearly 15%, if food banks closed for lack of demand.  While these are unlikely to be achieved in 2019, there is no reason why the Welsh Government – and other public bodies – can’t put solving poverty and inequality at the centre of their plans.

This means:

  • Rethinking economic policies
  • Building an inclusive labour market
  • Taking action to solve poverty
  • Providing better opportunities for young people
  • Transforming public services.

It won’t be easy. But then nor is living on £73.10 a week.

DOWNLOAD YOUR COPY HERE

Victoria Winckler is Director of the Bevan Foundation. The 2019 Outlook is a special issue of our regular State of Wales series, normally available only on subscription. Find out how you can get future issues here.

 

 

 

 

 

 

 

 

 

 

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