UK should invest £50bn in green projects to avoid recession - New Economics Foundation

The UK government should combat the next recession by investing as much as £50bn into green projects which would reboot the economy and help combat the climate crisis.

The latest report from the New Economics Foundation said it was the best way to try to beat a recession that the country was not currently equipped to handle.

Westminster should spend at least 2% of gross domestic product (GDP), or around £30.0bn, to decarbonise the economy.

Investments could be made in renewable energy projects, planting trees, transport infrastructure, electric vehicles, and retrofitting homes with new insulation.

“The government is now faced with two considerable policy challenges. The first is the alarming lack of progress in reducing UK carbon emissions to meet the UK’s climate goals. The second policy challenge is the current vulnerability of the UK economy to the next recession and the potential powerlessness of monetary policymakers to aid a recovery.

“Both challenges demand a single, common solution. The policy response to the next recession should contain within it the largest green stimulus in zero-carbon infrastructure that is feasibly possible,” said the NEF.

The NEF also looked into the effect that an overall green stimulus might have on UK public borrowing, debt, and financing costs.

According to the researchers, the above stimulus should come alongside other discretionary measures, including increases in unemployment benefits and cuts to consumption taxes.

The report also said there should be fundamental reforms to the UK’s macroeconomic policy framework, including a transformative new agenda for the UK’s fiscal rules, monetary policy, and macro-prudential policy.