The British Government should look to kickstart the economy by investing heavily in green projects, the International Monetary Fund’s chief economist has said.
Warning that the UK is not guaranteed the V-shaped recovery that many policymakers are hoping for, Gita Gopinath, the IMF’s economic counsellor, told MPs on the Treasury committee that spending on low-carbon projects could help to tackle the surge in job losses expected as a result of the COVID-19 crisis.
“For many countries we can see a very good argument for them to undertake public investment spending, because this is going to be a crisis where people are going to hold back spending for a while. The private sector will hold back from spending for a while, so there is a role for public investment,” she said.
“The UK has an opportunity to do public investment that addresses the need for a greener planet, and at the same time a jobs-rich recovery.”
Earlier this week, Boris Johnson outlined his plan to bring forward investment in schools, hospitals, roads and bridges worth £5bn, claiming that this investment will help Britain “bounce forward” from the crisis.
However, the Prime Minister’s so-called “new deal” faced criticism for not going far enough, both economically and environmentally.
Critics have noted that the figures announced so far amount to just 0.2 per cent of GDP – a fraction of the sort of money spent in Franklin D Roosevelt’s original New Deal programme during the 1930s in the US.
Green MP Caroline Lucas said: “The point about Roosevelt’s New Deal was that it was visionary – for the 1930s. Ninety years on, we need a different vision, so not a new deal, but a green new deal and that has to go far beyond tree-planting, welcome though that is.”
Investing in a green economic recovery could create as many as 1.6m new jobs in Britain by 2030, according to a report published on Thursday by the Institute for Public Policy Research (IPPR).
Calling on the Chancellor, Rishi Sunak, to prioritise the creation of new, green jobs in his summer economic update, the report suggests that 560,000 new roles could be created by increasing funding for the energy efficiency of homes, 700,000 jobs could be created in social care, while 230,000 jobs could be created by investing in sustainable public transport – such as walking and cycling infrastructure and electric vehicle charging points.
The creation of such jobs will be crucial to tackling the rising unemployment Britain is facing, Gopinath told MPs, whilst also urging the Government to consider a temporary increase in unemployment benefits to protect the most vulnerable and combat a potential dip in spending.
“This crisis presents an opportunity to accelerate the shift to a more productive, sustainable, and equitable growth through investment in new green and digital technologies and wider social safety nets,” she said.
Featured image: via Wikimedia Commons.