Archive for January, 2010
20th January 2010
a market for welsh futures?
I’m currently reading Fintan O’Toole’s highly readable modern morality tale of the hubris that sunk the Irish economy. The Irish are a resilient people who have had to suffer worse than their current travails. But the experience of Ireland ditto Iceland ditto the UK and the City of London points to the dangers of growing a financial services sector way out of proportion to the size of the economy.
Wales has never had this problem – though it was Cardiff and the Coal Exchange that saw the first million pound cheque. If anything, our financial services sector has been too small. Today’s news about a potential Japanese investment is welcome, coming as it does on the back of the Bosch announcement. But if Wales is to derive real long-term economic benefit from the pendulum swing back to manufacturing then we need to see investment in the kind of business-facing R&D facilities which the Germans, the French and the Danes have in droves. That’s why it was disappointing to hear the UK Government announce this week that the three new Engineering and Physical Sciences Research Councils’ Manufacturing Research Centres were going to be in Southampton (photonics), Loughborough (regenerative medicine) and Brunel (liquid metals). This follows on from the previous EPSRC Innovation and Knowledge Centres which were in Cambridge (photonics again – a sector in which Wales has considerable industrial expertise); Leeds (regenerative therapy); Cranford (surface engineering) and Belfast (IT). Wales has never had its fair share of UK R&D money or jobs. In the event of a hung parliament, we should demand that this appalling record of under-investment in Wales’ R&D base is reversed. A major Government Research Establishment should be moved here – or the National Science Academy to be set up under the One Wales Agreement should be funded partly by Central Government.
But back to financial services – because as London downsizes its own financial sector, maybe it’s time for us in Wales to expand ours. The WDA’s financial services initiative was a fairly damp squib back in the 1980s, but more recently the success of Admiral has shown what can be done. Cardiff Business School now even has a trading floor to simulate investment banking – and Swansea-based commodity futures trader OSTC promises to expand to a 100 traders in due course, bringing back memories of the halcyon days of Swansea as a financial centre. However, it is in retail financial services that Wales has the opportunity to grow. Our very weakness in the past – the fact that we unlike almost every other part of the British Isles, haven’t had a major financial institution fail – means we are now best placed to benefit from the rising demand for new trustworthy retail financial services – divorced from the froth and frolics of the City as retold so memorably by Don Anderson’s son, Geraint (who is about to do a series on Wales and the City). With Blackstone reportedly about to set up a new Home and Savings Bank to rival the current High Street Banks I hope International Business Wales is already making the case that it should have not just its back-office functions here like Legal and General, but be headquartered here too, like our own solid and dependable Principality. And after the next Election, if the Tories do win the election and proceed with their admittedly slightly dubious plans to break up the FSA and create a new Consumer Protection Agency – then there’s no reason at all it shouldn’t be located in Cardiff, not Leeds as currently touted. Dyfrig John – one of Ieuan’s new economic supremos, is a perfect choice to make the case – as a former Chief Executive of HSBC