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The UK Government Is Urged to Go Green to Help the Economy

A new study suggests that the British government could help to stave off recession by encouraging green projects. The idea is that they could put as much as £59 billion into plans to help the planet, and boost the economy at the same time.  

The Details of the Research

This study comes from the New Economics Foundation think-tank. They believe that encouraging green projects could help to avoid a repeat of the 2008 economic crisis, or that it would at least limit the size of the recession.

The researchers suggest that authorities should spend a minimum of 2% of the national GDP on green initiatives in the event of a new recession. Based on current figures, this would work out at around £30 billion.

They also recommend that spending 3% of the GDP total on helping the planet would make an even bigger impact. This would be a total spend of some £50 billion. It is recommended that the spending be spread over 3 years, with a particular emphasis on green projects in the first 12 months.

The money would be spent on decarbonising the economy. This would include making fresh investments in renewable energy, encouraging the use of electric vehicles, planting more trees and updating the country’s existing transport infrastructure. 

Is a Recession Likely?

There are differing opinions over whether the UK and the rest of the world could be heading into another major recession. Recent figures from the US suggest that the chances of this happening are currently greater than 50%.

On a worldwide basis, the more optimistic predictions point to growth slowing down in 2020. This would be a continuation of the trend that was seen in 2019. However, there is also the possibility that the global economy starts to contract, meaning an absolute recession.   

Sluggish economies around the world have led to poor growth rates and interest rate cuts. This has impacted businesses, many of whom have turned to the debt collection process to recover funds that they had loaned out or are owed.

This situation has led to a number of economists calling for governments to prepare their plans to increase spending. Since cutting interest rates hasn’t been particularly successful in stimulating the economy, raising spending is seen as being one of the final options.

Should This Be Done Anyway?

The report points out that spending big sums of money on the UK’s green infrastructure is necessary regardless of whether there is a recession or not. The think-tank members say that this is something that has to be done at some point.

Indeed, they mention that the government missed an opportunity to do something similar when the previous financial crisis occurred in 2008.  At this time, a spend of £10.5 billion on a home insulation plan would have led to major improvements by now.

Their figures show that spending this amount back then would have led to residential emissions being some 30% lower by 2018. The £10.5 billion figure represents just a third of the tax cuts that were introduced between 2010 and 2013.