WALES is now the least competitive part of the UK, a key study released today has revealed.

The influential UK Competitiveness Index (UKCI) – the findings of which are being revealed this morning at a Cardiff & Co event in London – shows that of the 12 regions and nations of the UK, Wales is the least competitive.

Since the last report was released in 2008, the nation has been left in bottom spot after being leap-frogged by the North-East of England.

Despite millions of pounds in European Union structural funds aimed at driving the performance of the poorest parts of the economy, the only positive for Wales is the competitive rating of Cardiff.

Based on a comparison with other rival large cities in the UK, the city is ranked fourth, behind Edinburgh, Bristol and Manchester, and above competitors such as Glasgow, Leeds, Birmingham, Sheffield and Liverpool.

And between 1997-2010 the city of Newport has seen the biggest competitiveness improvement in the UK, moving up from 36th to 28th. However, since 2008 it has fallen back one place from 27th.

Swansea is ranked 38th, up two places since 2008. Both Newport and Swansea have a competitiveness scoring below the UK average of 100, at 86.2% and 91.8% (Newport) respectively.

Cardiff has a rating of 100.2%, down marginally from 2008 when it was 100.5%. On an all-UK city analysis, Cardiff is ranked 14th, down one place from 2008. The top three cities are Guildford (120.4%), St Albans (118%) and Winchester (116.6%)

The report, by Professor Robert Huggins and Dr Piers Thompson of the Centre for International Competitiveness at the University of Wales Institute, Cardiff, finds that the least competitive localities across Britain are all in Wales.

Of the 379 localities across the UK, Blaenau Gwent is the least competitive locality overall, followed by Merthyr Tydfil, Caerphilly and Rhondda, Cynon, Taff.

The UKCI has been tracking data since 1997. It blends input factors, output and outcome factors such as research and development expenditure; business start-up rates; exports per head of the population: hourly productivity; gross weekly pay and unemployment rates.

Professor Huggins, who devised the UKCI, said: “This highlights the increasingly desperate state our economy [Wales] has fallen into. While the North of England is making significant progress in improving competitiveness, Wales is becoming increasingly detached.”

Wales’ competitiveness score is now just 83.9% of the UK average, benchmarked as 100. Since 2008 it has fallen by 2.8%. Over the same period the North-East of England has improved by 3.4%

On the relatively positive performances of Cardiff and Newport, Prof Huggins said: “Both have benefited from significant investment in urban regeneration. However, this has not been translated into improvement for the Welsh economy as a whole.

“There is little evidence that devolution and the establishment of the Welsh Assembly is contributing to improved competitiveness. In fact, the opposite appears to be largely true.

“It is time to rethink the process of strategy and policy-making in Wales. Unfortunately, the Assembly has not become the home of the type of long-term policy development we require. Wales should look to nations such as Finland, where its economic development strategy is signed up to by all parties, and remains in place regardless of changes in power. This more mature and patient approach has helped Finland become one of the world’s most competitive nations.

“Wales should also reconsider who is best equipped to develop these strategies. In Switzerland, for instance, politicians tend to be individuals who have already achieved significant international and national influence in other careers, and enter politics later as a form of civic responsibility. Perhaps this is a model the Assembly should be encouraged to emulate.”

The report shows that since the Labour government came to power in 1997, the North-West of England has seen the greatest improvement in competitiveness, rising from eighth to fourth.

The poorest performer is Scotland, falling from fourth to eighth position. Wales has gone from 11th to 12th.

The report also finds that for the first time London has slipped into second position and is surpassed by South-East England as the UK’s most competitive region.

Prof Huggins said: “The fall of London from the top of the competitiveness rankings is not only a sign of the impact of the financial crisis, but also of the increasing dual economy operating within London.

“While many parts of London are home to some of the world’s most competitive corporations and institutions, other parts suffer from continuing social exclusion, resulting in high levels of unemployment and low levels of economic activity.

“The challenge for the next UK government is to ensure that all regions and locations in the UK have sufficient opportunity to improve their economic fortunes.

“Many large urban areas have improved their competitiveness considerably, but there is little evidence that this is benefiting regions as a whole, especially the more rural parts. Infrastructure upgrades will continue to be required if our least competitive regions are going to fulfil their potential.

“This will mean that the distribution of resources between regions will have to be carefully considered. In particular, it will be important to ensure the benefits of large infrastructure projects designed to maintain the South- East’s and London’s global competitiveness are weighed up against alternative projects in other regions, which may yield a greater net benefit to the UK.”

Based on local authority areas Cardiff is the highest ranking in Wales of 379 in the UK at 130th.

Monmouthshire is the next best performing at 160th, followed by Flintshire at 220th.

The index also provides a city “happiness index” based on factors such as stress, confidence and the extent to which people enjoy life.

Manchester tops the happiness ranking. Cardiff is way down the list at 39th and Swansea 43rd.

An Assembly Government spokesman was sceptical about the research.

He said: “While the competitiveness index is an interesting approach, the evidence supporting the approach is incomplete at best. Other indictors suggest a more positive picture.

“For example, Wales has had larger increases than the UK in employment and household income per head since devolution and the new wealth and assets survey shows that Wales had the fifth highest total wealth per household in Great Britain.

“However, we are working tirelessly to secure the recovery and build a sustainable economy for Wales that not only safeguards jobs now, but also creates long-term, high-quality jobs for the future. Improving our competitiveness is a key part of this.

“In order to face today’s challenges and build a more prosperous Wales, we need to unlock the potential of the people and equip them with the skills they need and invest in their future.” That is why we are currently creating our Economic Renewal Programme so that our economic development budget and inward investment has the right focus.

“We have been speaking to businesses, academics and trades union members across Wales to see how we make every penny of our economic development budget effective. Only by working together can we position the Welsh economy to compete with the rest of the world.”

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