David Cameron has come out saying that the UK cannot guarantee Welsh EU funding following the Brexit vote.
Wales is currently in receipt of structural funding for the Valleys and West Wales up to 2020. Of the £1.8bn committed, some 40% has yet to be allocated. There is little hope that this money will continue to be allocated past 2018 unless the UK stays as a full member of the EU.
European Structural Funds in Wales have created 37,000 jobs according to the EU funds in Wales website.
This for me is one of the tragedies of the result of the referendum, EU structural funds are only available to full EU members. Since the objective of these funds is to correct imbalances of economies and social cohesion between European regions.
Even though the UK is a net contributor to the EU, Wales received most of the return EU inward investment since GDP per head is less 75% of the EU average, meaning it was one of the less developed regions. And thus entitled to EU structural funds.
The maths never added up
During the referendum campaign leader of the Welsh Conservatives, Andrew RT Davies claimed Wales would be better off financially outside the EU.
Mr Davies said: “Wales could be as much as half a billion pounds a year better off if the UK votes to leave the European Union.”
But this is only going to be true if the UK leaves the EU and doesn’t have to then pay to access the European Economic Area. The Think tank Open Europe estimated that the UK would pay 94% of its current costs (£31.4bn annually) if it left the EU, and then joined the EEA under a similar agreement to Norway’s.
It was never going to as easy as changing budget lines, instead of sending that money to the EU it is swapped to the “give to the Welsh” budget heading. Given the impact on the economy and possible UK recession, there might not be the money in the economy to continue the investment programme.
And while the EU will continue to fund projects in Wales up until the UK leaves, it is highly likely that planned investment after 2018 will be cancelled.
Sometimes you never understand what you have until you lose it.
Subscribe to never miss a post.