Lack of industrial strategy hampering UK in global green growth race

The analysis highlights a significant disparity between the UK and its European counterparts concerning the contribution of the green goods and services sector to national GDP.

The sector contributes a mere 3.9% to the UK’s GDP while the EU touts a 5.8% share. Countries such as Denmark and Sweden are leading the pack with 10.9% and 11.5%, respectively.

The report underscores the enormous potential that the transition to a net-zero economy offers. It highlights the possibility of creating 1.6 million jobs and adding up to 2.4% to the UK’s economic output (GDP) by 2030.

However, the IPPR argues that the nation’s capacity to harness this green growth is stymied by the absence of a green industrial strategy and insufficient public investment in the net-zero economy, similar to that of the Inflation Reduction Act (IRA) in the US.

IPPR’s senior research fellow Josh Emden said: “Our analysis highlights the glaring disparity between the UK and its international competitors in harnessing the economic boons of the green sector.

“The roadmap to net-zero is not just a climate necessity but an economic opportunity waiting to be tapped. With a green industrial strategy and robust public investment, the UK can not only catch up but lead the green economic frontier.”

The IPPR’s analysis reveals that public investment commitments to low-carbon technologies in the UK are among the lowest in the G7 group.

Furthermore, when compared to most European nations, the UK lags in terms of the percentage of its workforce employed in the renewable energy sector. For instance, if the UK’s wind industry were to match Denmark’s performance, it could create an additional 98,000 jobs, or 20,000 more if it were on par with Germany.

The IPPR attributes this discrepancy to the lack of effective coordination between public research, strategic investment, and industry collaboration seen in other countries—a synergy noticeably absent in the UK.

UK moves into reverse gear 

The IPPR’s report spotlights a global green race in which other nations are surging ahead, while the UK appears to be moving in reverse.

IPPR’s associate director Luke Murphy said: “The UK is at a pivotal juncture. While other nations are forging ahead in the global green race, the UK is moving into reverse gear.

“Every further day of inaction is costing us valuable jobs, technological advancements, and a sustainable future.”

This contrast is evident in actions such as the US Inflation Reduction Act and the EU’s Green Deal, juxtaposed with the UK’s delays in banning the sale of petrol and diesel cars, deferring the phase-out of gas boilers, and scrapping energy efficiency standards for landlords.

In response to these findings, the IPPR is calling on all political parties to develop and implement a green industrial strategy. Additionally, it is urging an increase in public investment in net-zero initiatives and nature conservation to unlock the economic benefits of transitioning to a greener economy.

Last month, the Aldersgate Group revealed that neglecting to strengthen the industrial sector and respond to global competition, such as the Inflation Reduction Act (IRA), can put the UK at risk of losing £224bn by 2050.