Study: UK’s Future Lies in Green Economy, Not Tax Giveaways

In a recent study, leading economists have advised the UK to prioritize investing £26bn annually in a low-carbon economy to stimulate prosperity rather than pursuing tax giveaways, which could lead to further economic stagnation. The research suggests that directing investments towards energy infrastructure, transport, innovation in new technologies such as AI, and the natural environment would rapidly boost the UK’s economy. This level of public investment is anticipated to generate approximately twice as much accompanying investment from the private sector and would yield significant returns in terms of higher productivity, efficiency savings, economic growth, and carbon reductions.

The Perils of Stifling Investment

The current government’s plans to stifle investment are projected to perpetuate stagnant productivity and weak economic growth. Conversely, the study recommends that allocating any fiscal headroom within the public finances towards investments, as opposed to tax cuts, is vital for the UK’s chances of competing in the global innovation, efficiency, and productivity landscape.

Echoes of Green Investment Plans

These findings echo the commitments made by Keir Starmer, the Labour leader, to invest £28bn a year in a “green prosperity plan.” However, these commitments have faced opposition and are currently under review within the opposition leadership. The study, published by the London School of Economics, has independently arrived at conclusions that align with the magnitude of the green investment plans proposed by both Labour and the former prime minister Boris Johnson.

Deficient Infrastructure and Underinvestment

It’s essential to acknowledge that the evidence advocates for an uplift in public investment after a decade of underinvestment, which will give the UK a competitive edge in the global innovation race. While high taxes do pose constraints on private activity, the evidence suggests that the UK’s far bigger constraint lies in deficient core infrastructure and underinvestment in various forms of capital, including produced, human, intangible, and natural capital.
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The Urgent Need for Stepped-up Public Investment

Shaun Spiers, executive director of the Green Alliance think tank, emphasized the urgent need for stepped-up public investment to address the consequences of underinvestment, which are evident in failing infrastructure, costly energy, and a depleted natural world. Public investment is crucial for achieving net zero, restoring nature, and positioning the UK to compete globally in the green industries of the future.

Labour's Green Prosperity Plan and Economic Growth

Ed Miliband, the shadow secretary of state for energy security and net zero, emphasized the significance of investment in driving economic growth, reducing energy bills, and ensuring energy security for the country. He highlighted Labour’s green prosperity plan as a pivotal strategy to break free from years of low growth and stagnant living standards.

Government's Focus on Long-term Decisions

In response, a government spokesperson emphasized the focus on long-term decisions to strengthen the economy, including initiatives to transform the energy industry towards cleaner and renewable energy sources. The government’s efforts are geared towards attracting significant investments in green industries of the future, with a strong emphasis on creating green jobs and supporting sustainable economic development.


The evidence presented in the study underscores the critical importance of prioritizing investments in a sustainable and resilient transition towards a low-carbon economy. The future prosperity of the UK hinges on strategic public and private sector investments in energy infrastructure, innovation, and environmental conservation. It’s imperative for policymakers to recognize the transformative potential of green investments in driving economic growth, fostering innovation, and enhancing the UK’s competitive position in the global arena.


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