Ditching low carbon investment could drag UK back into recession
Infrastructure investment worth £180bn and equating to 12% of GDP is at risk because of the Government's unclear commitment to a low- carbon economy, according to a report released today.
Commissioned by the think-tank Green Alliance, the report predicts that if the £60bn of low carbon projects planned for the next two years were to go ahead, it could kick start the economic recovery, with a 0.7% increase in GDP by 2015.
However, if the low carbon investment programme is dropped, the report estimates that GDP could fall by 2.2%, which is likely to push the UK back into recession.
According to analysis of the Treasury Infrastructure pipeline, more than 70% of planned spending on projects is on infrastructure, which is helping the UK's transition to a low carbon economy.
The Chancellor announced in last month's spending review that £180bn would be spent on these projects between 2013 and 2020. This is more than four times that of infrastructure relating to high carbon activities.
In addition, the report finds that offshore wind projects alone are worth around four times the planned spending on gas power and global spending on renewables has increased more than sixfold over the last decade.
The report finds that a clearer low carbon commitment from the Government could unlock the huge potential of private sector investment and help transform the UK into a cleaner and more prosperous economy.
Green Alliance director Matthew Spencer: "Unfortunately the big beasts of British politics have been largely silent about this opportunity, and investor confidence has dropped as the perception has grown that the UK is not fully committed to its current low carbon direction.
"This is perverse. Whether you are a fiscal conservative or a Keynesian you should back these projects because of their big short-run growth impact and their low requirement for government funding."
Greenpeace said the analysis should trigger Prime Minister David Cameron to put pressure on the Treasury.
Greenpeace executive director John Sauven said: "There is a prevailing sense of uncertainty within the industry caused by a lot of barking but not enough biting on green growth.
"Cameron now needs to remove that uncertainty by standing up to those in his party who fail to see the opportunities of a 21st century green economy."