Wales received the most funding from the EU, £4 billion in structural funding since 2000. This funding was used for infrastructure development, research and innovation, youth employment, tackling poverty and other development programmes. Yet, against their own material interests, Wales voted leave by a margin of 52.5%. Many have metaphorically termed this phenomenon: “turkey voting for Christmas.” Whilst the negotiating process has not been confirmed and all EU treaties and law continue to apply, it is essential to start considering the impacts Brexit might have on the already severe poverty situation in Wales.
According to the Welsh government’s report, 23% of all individuals in Wales live in poverty. This rate, while lower than London and equal to the West Midlands, is higher than the remaining 9 UK regions and countries. Oxfam stated that Wales does not only need jobs, but high-paid jobs. Most employment opportunities in Wales are part-time and extremely low-paid, which results in lower income for households. On the same line, child poverty remains a prominent issue in Wales with almost one in three children living in poverty, meaning that Wales has the highest rate of child poverty of any nation in the UK. It equates to almost 200,000 children in poverty across Wales. The social and economic implications of these trends are concerning, especially as Brexit is expected to worsen the crisis faced by the Welsh government currently.
The structural funding programmes that Wales has received from the EU since 2000 are expected to last until 2020. However, with the Leave vote, Wales is no longer eligible to renew the deals that have contributed so much to the region’s development. During the referendum, campaign leader of the Welsh Conservatives, Andrew RT Davies claimed Wales would be better off financially outside the EU, asserting that since the UK would no longer have to contribute to the EU, the amount would go to Wales. In reality, after subtracting its proportioned contribution from the funds received from the EU, Wales still gets £245 million, a sum the nation would no longer enjoy after Brexit is formalised. Mark Drakeford – Cabinet Secretary for Finance and Local Government warned that funding cuts would have a “negative impact on our budgets and strategies for growth and jobs.”
Examining the nature of the Welsh economy, Wales has a higher proportion of inward investment (FDI) than averages across the UK. Many of the 1,100 foreign owned firms in Wales that employ 150,000 people came here to be within the European Single Market. If the Conservative government goes ahead with its plan to pursue a hard-Brexit, allowing the UK to tighten its immigration regulations towards other European countries but simultaneously expelling itself from the single market, UK’s exports are subject to both tariffs and non-tariff barriers. With 41% of Wales’ exports going to the EU, tariffs may cause significant damage to the economy. Wales’ big exporters such as Airbus, Toyota and Ford, unwilling to risk their market competitiveness, may move their factories to other EU countries, costing Wales even more jobs. Without plans to create new jobs, poverty and homelessness would rocket.
The agriculture sector, considered the ‘economic backbone’ of rural Wales, may also suffer because of Brexit. The EU’s Common Agricultural Policy provides £200 million a year in support to more than 16,000 Welsh farms. The sector employs more than 57,000 people and contributes substantially to Welsh GVA. Heavily subsidised, the First Minister made it clear that farming could not continue without European Funding. President of Farmers’ Union of Wales Glyn Roberts said: “Brexit could leave rural areas in Wales facing levels of poverty not seen since the 1930s.” It is clear that Brexit would have dire impacts upon the Welsh economy. A hard Brexit may put thousands of people in extreme hardships.
This begs the question: How can the Conservative Government ensure the well-being of the Welsh? Everything is still very uncertain as the negotiating process has not begun. We must now wait and see how hard a bargain Theresa May can drive with the EU. In the meantime, it’s probably best for the Welsh government to prepare for the worst, focusing on facilitating a more holistic plan to alleviate poverty. More affordable homes must be built, initiatives must be made to attract businesses, and more money must be invested in education to produce higher skilled workers. The Welsh government should perhaps take advantage of those EU funding programmes while they last.