- January 10, 2012
- Posted by: Mark Drakeford AM
- Category: News
Mark Drakeford: As many other speakers in this debate have already pointed out, at the heart of what we are talking about is the fact that there is an intrinsic relationship between the economy of Europe and the economy of Wales. It was the opportunity to be influential in setting that relationship that the Prime Minister turned his back on when he decided to appease his own Europhobic backbenchers, rather than to be an active player on the European stage. However, when he left the room he left his fingerprints all over the plan for the future of the eurozone—a plan dreamed up by the zealots of the neo-Conservative right, and a plan that, economically, produces the very worst of many worlds. It is a deal that The Financial Times has said will produce a self-inflicted, austerity-induced economic ice age in which the blinkered pursuit of balanced budgets will choke off whatever lingering prospects there may have been for economic growth.
Those are not just theoretical threats; the evidence is staring right at us. In December, the International Monetary Fund made its fifth visit to report on Greece since the euro crisis began and since this particular set of prescriptions were applied. It reported, for the fifth time, that the Greek position had worsened and concluded, for the first time, that there was a real and present danger that the level of austerity already in the system would hit the Greek economy so hard that tax revenues would collapse and that the spiral of decline in the Greek economy would become entrenched. That is what the IMF report said. As a result, it radically amended its forecasts for the Greek economy, predicting that it would contract by 6 per cent in 2011 and by 3 per cent in 2012—it has already shrunk by 15 per cent since the recession began.
To come closer to home, you could look at Ireland. There was a chilling 2 per cent contraction in a single quarter in the Irish economy, for the last quarter on which reports were made. It was described by the leading Irish analyst Professor Ray Kinsella of University College Dublin as an economy trapped in a vicious circle of contracting demand, a massive credit squeeze and a policy-induced recession. That is what is on offer on the European stage, and it has a direct effect on the economy in Wales. We have structural funds: the European social fund and the ERDF, which are vital programmes in protecting Welsh businesses, generating demand for Welsh goods and services and providing the sort of training and education that prepares Welsh workers for a prosperous future. We heard some dreadfully recycled old rubbish earlier in the debate about the relationship between those programmes and the private sector. I will give you some facts. The ERDF programme for west Wales and the Valleys, which is the largest of the four programmes, has awarded 33 contracts to the third sector, 37 contracts to the public sector and 569 contracts to the poor old private sector that is apparently doing so badly out of these funds.
Eluned Parrott: Why do you think that the business world’s perception that it is not involved enough in European programmes is out of date, when the evidence given to the Enterprise and Business Committee from the Federation for Small Businesses is five weeks old? It is not out of date. It is as up to date as it could possibly be.
Mark Drakeford: Simply because mistaken views are five weeks old does not make them any better, now or then. I am giving you the facts: 33 voluntary sector projects, 37 public sector contracts and 569 private sector contracts. How does that possibly add up to a sector that is not engaged in European projects? It is vital for the private sector in Wales. However, as the euro crisis unfolds and the euro depreciates, Wales loses £15 million for every 1c by which sterling strengthens. When this Assembly was elected at the start of May 2011, the pound stood at €1.11; now, it is at €1.21. For every 1c, we lose £15 million in European funding for Wales. That is why there is an intrinsic relationship between what happens in Europe and what happens in Wales. That is why the First Minister was so right to produce his letter before Christmas, and why this debate is so important as a statement of what we believe the relationship between Wales and Europe to be.