The economic crisis caused by the Coronavirus (COVID-19) pandemic should not disguise the necessity of tackling the climate emergency, says research from Manchester Metropolitan University.
In a new policy paper, Greening the ‘Green Shoots’ of Recovery, the University’s Future Economies Research Centre sets out four pillars of a proposed response to address the UK’s short-term economic effects of the pandemic while tackling the looming crisis of climate change.
If implemented, the suggested financial interventions would collectively protect livelihoods, create value for the UK state and promote sustainable jobs, according to the research.
The paper proposes a green economic rescue package focussed on four elements,a green financial stimulus in the emerging low-carbon economy,subjecting companies seeking state aid to an assessment of their economic, social and environmental impacts to determine the extent and type of support offered,taking equity stakes in companies which can then be used to create a UK Sovereign Wealth Fund and strengthening the safety net to protect citizens during the downturn and the potentially turbulent sustainability transition
Dr Dan Bailey, Senior Lecturer in the Future Economies Research Centre at Manchester Metropolitan University, said: “The ‘new normal’ that emerges from the Coronavirus pandemic will be strongly shaped by the economic interventions made by the government during the crisis.
“The resources being mobilised during this downturn should not simply be focused on preserving the economic status quo, but rather situated within a broader strategy of transformation.”
The proposals put forward in the policy paper address the wide range of issues facing the UK economy.
This includes rising inequality, low productivity and investment, Brexit-related disruptions and the need to decarbonise the economy by 45 per cent in the current decade to meet obligations enshrined in the Paris Agreement, an international accord signed in 2016 that proposed reductions in greenhouse gas emissions.
The research encourages policymakers to transform their approach to economic recovery against this backdrop, following a decade of austerity and rising greenhouse gas emissions.
Dr Bailey added: “A more comprehensive understanding of current macroeconomic challenges should alert policymakers to the dangers of attempting to preserve the economic status quo.
“It should also oblige policymakers to question how different an economic rescue package could be if it was designed to respond to the multiple challenges facing the economy.
“With the Coronavirus pandemic exposing the need for fiscal and monetary expansion, a more strategic and discerning use of the government’s power and resources must be centred on changing the way the UK’s economy operates.”