A recent study has shown that the UK must invest £26bn a year in a low-carbon economy to revive prosperity instead of planning tax giveaways that will only lead to further stagnation.
Findings of the study showed that Investing in energy infrastructure, transport, innovation in new technologies such as AI, and the natural environment would boost the UK’s economy rapidly.
According to a major paper by Lord Stern, a former chief economist of the World Bank, and colleagues from the London School of Economics, Public investment at that level would be likely to generate about twice as much accompanying investment from the private sector, and would quickly pay off in higher productivity, efficiency savings, economic growth and carbon reductions.
Current government plans to stifle investment, by contrast, would lead to a “continuation of stagnant productivity and weak economic growth”.
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According to reports, the findings are strikingly similar to the commitments made repeatedly by Keir Starmer, the Labour leader, to invest £28bn a year in a “green prosperity plan”. Those commitments have come under sustained attack from the Tories, and are now to be reviewed by the opposition leadership this week, as some figures within the party are understood to favour dropping the pledge.
The authors of the LSE paper, entitled Boosting Growth and Productivity in the UK Through Investments in the Sustainable Economy, published on Monday, arrived at their conclusions independently, by examining the fitness of the UK’s crumbling infrastructure, the challenges and benefits of low-carbon investment, the broader economic environment and international competition.
Dimitri Zenghelis, who is lead author of the paper, said: “This does indeed mean that Labour’s £28bn-a-year green investment plans are of the right magnitude, consistent with investing in the structural change associated with a sustainable and resilient transition.”
However, he noted that the investments required – equivalent to an increase in public investment of roughly 1% of GDP – were also similar to those espoused by the former prime minister Boris Johnson, when he held the presidency of the G7 group of advanced industrialised nations.
Story was adapted from the Guardian.
