In this piece Joe Rossiter of the Institute of Welsh Affairs puts the spotlight on what good growth means for Wales and emphasises a connection with the Welsh Government’s landmark legislation, the Well-being of Future Generations Act.
What does ‘good growth’ mean in devolved Wales? Lifting wellbeing for the long-term
If distinctive public policy in post-devolution Wales is known, it can be articulated in one piece of legislation, the Well-being of Future Generations Act, which recently celebrated its tenth anniversary. It sets out a vision for a Wales underpinned by seven wellbeing goals, representing the long-term role of public bodies in lifting collective wellbeing.
Recent global political instability has shown the lack of agency that national governments have over achieving sustained periods of growth. The underlying principle that we must rely on growth to achieve the fundamental determinants of wellbeing: from high quality public services, safe, secure and sustainable access to housing, maintaining basic living standards is an argument coming under significant strain.
With devolved elections quickly coming onto the horizon in May 2026, fundamental questions about growth, economic performance, and, critically, the nation’s wellbeing are being posed.
So, what does growth, and good growth specifically, mean in our multi-layer governance structure? And what would it mean when devolved governments seek to take a different direction to managing our economy?
The Welsh Economy
Wales’ macro-economic performance is largely a reflection of UK-wide economic trends, albeit with some of the poorest economic outcomes of any UK region or nation.
The Welsh Government’s annual Wellbeing of Wales report presents a stark picture:
- An economic inactivity rate of over 20% (and above the UK average)
- 21% of people living in poverty, with children more likely to be living in relative poverty
- Household incomes in Wales are 82% of the UK average
- Wales has the lowest proportion of ‘innovative firms’ in the UK
- Significant gaps in healthy life expectancy between the most and least deprived parts of Wales
- Recent research also outlines a systemic productivity gap between Wales and other UK nations, as well as international comparator nations.
So far the Welsh economy has failed to deliver greater wellbeing for people in Wales. But what does growth mean in the Welsh context?
Growth and political agency – a devolved perspective
The Welsh Government’s Economic and Fiscal Report, which accompanies the Welsh Government’s recently agreed budget for 2025-26, notes that the ONS have ‘suspended the quarterly [GDP] data for Wales due to concerns about data quality.’ Instead, for indications of growth, the Welsh Government now takes the UK figure and presumes Welsh performance reflects this. This is profoundly troubling.
First Minister, Eluned Morgan has set four priorities including:
“Green jobs and growth – creating green jobs that tackle the climate crisis and restore nature, while making families better off; accelerating planning decisions to grow the Welsh economy’”
Growth thus represents the economic priority of Welsh Government. But we can’t currently accurately measure what Welsh growth is or effectively monitor whether policies put in place by our devolved government are impacting it.
Furthermore, the levers that Welsh Government has to shape growth are significantly limited. Despite often foregrounding growth as a comprehensive mission, approaches to growth-generating projects often do not reflect this, suggesting priorities lie elsewhere. This is particularly the case with largescale infrastructure projects.
As the Institute of Welsh Affairs has outlined, the vast majority of Welsh Government’s budget is pre-allocated to the delivery of public services. The NHS in Wales, takes up around half of the Welsh Government budget, with Housing and Local Government and Education also receiving hefty chunks. Likewise, much of the Welsh Government’s recent budget uplift will be put towards supplementing public service spending.
New regional levels of governance, Corporate Joint Committees (CJCs), are part-funded by the Welsh Government, in part to shape regional economic strategy across localities larger than local authorities, but much of their budget comes from UK Government. Their policies therefore reflect UK Government priorities, such as those set out in the Industrial Strategy. The CJCs also vary greatly, especially in relation to the focus and priority of their investment portfolios, and therefore their likely impact on economic performance in their regions.
All of this suggests that devolved policymakers have only limited control and ability to influence growth. This is not to say that devolved government shouldn’t actively try and help co-shape policy and investment which directly impact the Welsh economy, but that this is not deliverable by devolved government alone.
Focusing our economic strategy on increasing growth is therefore something of a mirage, and a damaging one at that, because it means we don’t focus on the levers that are held at devolved level: those that can meaningfully impact collective wellbeing in Wales.
So, what does good growth for Wales look like and is it something our government should prioritise? If not, what could a different vision for a more successful Welsh economy look like, and how can this provide greater agency for Welsh Government?
Reasons for optimism – a new approach to improving long-term wellbeing
Wales is proud to be the first nation in the world to legislate to act in the interests of future generations.
This legislation should provide the North Star for the Welsh Government that comes following the Senedd elections in 2026, highlighting a type of economy which foregrounds lifting collective wellbeing in Wales.
The next Welsh Government should focus on what it has powers over and budget to influence, and, fundamentally, that isn’t growth alone. Instead, we should focus on using the £25.8bn (at last count) budget to tackle our major challenges and improve wellbeing. In an economic sense, this means using economic levers to tackle social, environmental and foundational goals. Wales doesn’t have the budget to fix every problem alone, but it could focus on things like increasing wages, improving living standards, productivity, or growing and scaling small businesses to contribute. This is not to say that growth isn’t important – but it is what kind of growth that is critical, and how this can be felt in the lives of people in Wales.
Requiring growth to prop up public services will not solve our problems, and is profoundly disempowering for Welsh Government, as they cannot shape it alone. Acknowledging these limitations means extracting the maximum value (from a wellbeing perspective) from the powers and resources devolved government do have. This means being selective and focused on the types of economic investments and support they provide. This would mean supporting a smaller number of industries, which offer long-term wellbeing benefits, whether through raising productivity, offering secure, fair employment and those that tackle the nation’s long-term challenges (whether the climate crisis, economic inequality or a host of others).
The next Welsh Government should define what a successful economy looks like, detailing what they will prioritise and how this will raise wellbeing over the long term. Welsh Government should also draw associated conditionality for firms seeking to access public funding, perhaps emulating Scotland’s ‘Fair Work First’ initiative. Welsh Government must create a sense of purpose through a comprehensive vision of what growth in Wales is for, building on the Wellbeing of Future Generations Act.
A shift towards an outcome-oriented economic strategy, utilising devolved levers, is critically needed. Wales is well placed to pioneer a wellbeing economic model which sets the conditions for a successful, green and fair economy for the long-term. A consistent and clear-sighted approach to economic policy is the only way to tackle Wales’ systemic economic challenges which precede devolution itself.
About the author
Joe Rossiter is Co-Director of the Institute of Welsh Affairs (IWA). Joe is responsible for delivering the IWA’s broad portfolio of policy and research. He is focused on delivering an impact which helps to create a better Wales for all. Prior to joining the IWA in November 2022, Joe worked at Sustrans Cymru and Stonewall Cymru, where he helped to develop equality and sustainable transport policy solutions.
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