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Amend opening. This article is about Welsh fiscal balance' NOT fiscal deficit! Second paragraph: introduce deficit, and withheld powers by UK gov as stated in the references
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It is possible that [[Wales]] as well as England has a fiscal deficit since the [[public expenditure]] in both countries exceed the [[tax revenue]] collected. Some state that the deficit is not a Welsh deficit as Wales does not have significant powers over taxation, and does not set our budget, in that the UK Government holds many of these fiscal powers.<ref name="Nation Cymru">{{cite news |title=Why framing the union as a progressive force is pure dogma |url=https://nation.cymru/opinion/why-framing-the-union-as-a-progressive-force-is-pure-dogma/ |access-date=16 February 2021 |agency=Nation Cymru |publisher=Nation Cymru |date=17 January 2021}}</ref><ref name="Borrow more">{{cite news |title=Allow Welsh Government to borrow more, says Mark Drakeford |url=https://www.bbc.co.uk/news/uk-wales-politics-44147363 |access-date=17 February 2021 |agency=BBC |publisher=BBC |date=16 May 2018}}</ref>
It is possible that [[Wales]] as well as England has a fiscal deficit since the [[public expenditure]] in both countries exceed the [[tax revenue]] collected. Some state that the deficit is not a Welsh deficit as Wales does not have significant powers over taxation, and does not set our budget, in that the UK Government holds many of these fiscal powers.<ref name="Nation Cymru">{{cite news |title=Why framing the union as a progressive force is pure dogma |url=https://nation.cymru/opinion/why-framing-the-union-as-a-progressive-force-is-pure-dogma/ |access-date=16 February 2021 |agency=Nation Cymru |publisher=Nation Cymru |date=17 January 2021}}</ref><ref name="Borrow more">{{cite news |title=Allow Welsh Government to borrow more, says Mark Drakeford |url=https://www.bbc.co.uk/news/uk-wales-politics-44147363 |access-date=17 February 2021 |agency=BBC |publisher=BBC |date=16 May 2018}}</ref>

By comparison, the entire [[UK fiscal deficit]] was £350 billion between 2019-2020.<ref>{{cite news |title=UK set to borrow £350b and more is likely: think tank |url=https://www.businesstimes.com.sg/government-economy/uk-set-to-borrow-£350b-and-more-is-likely-think-tank |access-date=30 January 2021 |publisher=Business Times |date=9 July 2020}}</ref> The total UK public debt exceeds £2 trillion (which is equivalent to 85% of GDP).<ref>{{cite report|url=https://www.cardiff.ac.uk/__data/assets/pdf_file/0004/1540498/Government-Expenditure-and-Revenue-Wales-2019.pdf|publisher=Wales Fiscal Analysis ([[Wales Governance Centre]]; [[Cardiff University]])|date=2019|title=Government Expenditure and Revenue Wales 2019|page=39}}</ref><ref>{{cite web |last=Barry |first=Professor Mark |title=The Environment, Tax and Wales |url=https://swalesmetroprof.blog/2021/01/04/the-environment-tax-and-wales/#_edn25 |website=swalesmetroprof.blog |access-date=13 January 2021}}</ref> GDP per head in Wales in 2018 was £23,866, an increase of 2.9% on 2017. This compares to Italy's GDP/capita of £25,000, Spain £22,000, Slovenia £20,000 and New Zealand £30,000.<ref>{{cite web |last=Barry |first=Professor Mark |title=The Environment, Tax and Wales |url=https://swalesmetroprof.blog/2021/01/04/the-environment-tax-and-wales/#_edn25 |website=swalesmetroprof.blog |access-date=13 January 2021}}</ref><ref name="Nation Cymru"/>


==Deficit==
==Deficit==

Revision as of 13:01, 3 September 2021

Net fiscal balance of Wales (red) and UK (blue) in percent of GDP
Net fiscal balance by UK nation and region per capita, 2017–18

The Welsh fiscal balance is the difference between general government revenues and expenditures, showing how much in a given year government spending is financed by the revenues collected in Wales.

It is possible that Wales as well as England has a fiscal deficit since the public expenditure in both countries exceed the tax revenue collected. Some state that the deficit is not a Welsh deficit as Wales does not have significant powers over taxation, and does not set our budget, in that the UK Government holds many of these fiscal powers.[1][2]

By comparison, the entire UK fiscal deficit was £350 billion between 2019-2020.[3] The total UK public debt exceeds £2 trillion (which is equivalent to 85% of GDP).[4][5] GDP per head in Wales in 2018 was £23,866, an increase of 2.9% on 2017. This compares to Italy's GDP/capita of £25,000, Spain £22,000, Slovenia £20,000 and New Zealand £30,000.[6][1]

Deficit

Nine of the twelve UK statistical regions (the exceptions are London, South East England and East of England) carry a deficit. At £4,300, Wales' fiscal deficit per capita is the highest of the regions except for Northern Ireland fiscal deficit, which is nearly £5,000 per capita.[7][8] Tax revenue per capita in Wales is 76 percent of the UK average, but spending is 108 percent, leading to shortfall. Wales spends more on social security than other parts of the UK; capital expenditure on infrastructure such as transport (which is not devolved to Wales) is significantly less.[9]

In 2016, Wales spent £14.7 billion more than it gathered in local revenue, which decreased to £13.7 billion for the 2018–19 fiscal year, due to reduction in public spending. Public spending peaked in 2011–12.[10][8] For the 2018–19 fiscal year, the fiscal deficit is about 19.4 percent of Wales's estimated GDP, compared to 2 percent for the United Kingdom as a whole.[9]

Implications

Wales spends 11 percent more per person than England. Welsh economist Ed Gareth Poole notes that fiscal transfers between wealthier and poorer parts of a sovereign state are not unusual.[9] Wales's government deficit was consistently higher than that of Greece during the Greek government-debt crisis[11][12] but, unlike Greece, the gap was covered by transfer payments from the rest of the UK. Such transfer payments, according to the economist Robert A. Mundell, are essential to a functional currency union.[13]

Criticism of figure

The figure has been criticized as misrepresentative of the true financial position that an independent Wales would experience. Commentators contend that a sovereign Wales could raise additional revenues and reduce expenditure on items not directly connected to the Welsh economy; the Welsh economist John Ball suggests that an independent Welsh government could plug the budget shortfall by instituting land value tax (possibly raising £6 billion per year), tourist tax and "exploring some ways in which taxation revenue could be improved in a sovereign state". In his opinion, VAT revenues from businesses not owned by Welsh residents are underestimated in the current revenue data, meaning that the shortfall may not be as high as it appears.[14][15]

Ball also suggests that Wales' £3bn defense cost is excessive and that at 3% of GDP is more than any other country. He also notes that incoming pensioners from England cost £2bn and a further “accounting adjustment” of another £3bn. [14] The vast number of external business ownership in Wales makes it difficult to estimate the amount of VAT actually collected in Wales and which is allocated to the business headquarters in England. An independent Welsh government would decide how much to spend on matters such as defence, and could have its own currency.[16]

See also

References

  1. ^ a b "Why framing the union as a progressive force is pure dogma". Nation Cymru. Nation Cymru. 17 January 2021. Retrieved 16 February 2021.
  2. ^ "Allow Welsh Government to borrow more, says Mark Drakeford". BBC. BBC. 16 May 2018. Retrieved 17 February 2021.
  3. ^ "UK set to borrow £350b and more is likely: think tank". Business Times. 9 July 2020. Retrieved 30 January 2021.
  4. ^ Government Expenditure and Revenue Wales 2019 (PDF) (Report). Wales Fiscal Analysis (Wales Governance Centre; Cardiff University). 2019. p. 39.
  5. ^ Barry, Professor Mark. "The Environment, Tax and Wales". swalesmetroprof.blog. Retrieved 13 January 2021.
  6. ^ Barry, Professor Mark. "The Environment, Tax and Wales". swalesmetroprof.blog. Retrieved 13 January 2021.
  7. ^ Birnie, Esmond (18 February 2020). "Scrutinising Northern Ireland's sizeable fiscal deficit is interesting". Belfast Telegraph. Retrieved 23 April 2020.
  8. ^ a b Rutter, Calum (2 August 2019). "Welsh spending cuts cause deficit reduction, says study". Public Finance. Retrieved 23 April 2020.
  9. ^ a b c "Shortfall in public finances in Wales due to lower revenues, report finds". Cardiff University. 2 July 2019. Retrieved 23 April 2020.
  10. ^ Dickins, Sarah (29 July 2019). "Tax and public spending gap narrows in Wales". BBC News. Retrieved 23 April 2020.
  11. ^ Kindreich, Adam (20 July 2017). "The Greek Financial Crisis (2009–2016)". Financial Scandals, Scoundrels & Crises. Exhibit 2. Retrieved 23 April 2020.{{cite web}}: CS1 maint: location (link)
  12. ^ Government Expenditure and Revenue Wales 2019 (PDF) (Report). Wales Fiscal Analysis (Cardiff University). 2019. p. 9.
  13. ^ Thomas, Landon (27 January 2012). "The Welsh Economy Slips, but London Cushions the Fall". The New York Times. Retrieved 23 April 2020.
  14. ^ a b Ball, John (25 January 2019). "Is Wales really too poor to be independent?". Institute of Welsh Affairs. Retrieved 23 April 2020.
  15. ^ Ball, Dr John (5 July 2019). "Does Wales have the tax base to make independence viable?". birminghampost. Retrieved 23 April 2020.
  16. ^ Ifan et all, Guto. "Wales' Fiscal Future: A Path to Sustainability" (Document). Cardiff University. pp. 7–9. {{cite document}}: Unknown parameter |access-date= ignored (help); Unknown parameter |url= ignored (help)
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