Economic growth is not compatible with climate change targets for rich countries, according to a new report out today.
The New Economics Foundation (NEF) warns that global economic expansion is not possible if the world is to restrict the temperature rise to 2C – the EU’s agreed political objective.
The NEF found that this would require unprecedented – and probably impossible – reductions in the carbon intensity of a growing economy. None of the models or variations it looked at could square the circle of global economic growth with climate safety.
Andrew Simms, policy director at the NEF, said: “Endless growth is pushing the planet’s biosphere beyond its safe limits. The price is seen in compromised world food security, climatic upheaval, economic instability and threats to social welfare. We urgently need to change our economy to live within its environmental budget. There is no global, environmental central bank to bail us out if we become ecologically bankrupt.”
As economists and politicians expect the UK to emerge from recession tomorrow after a year and a half, Roger Bootle, Deloitte’s economic adviser, warns today that fiscal policy will be a greater drag on growth than elsewhere. He expects Britain’s economy to grow by just 1% in 2010, compared to growth of 1.5% in the eurozone, 3% in the US and Japan and 3.5% globally.
“The constraints on the strength of the global recovery over the next couple of years look set to bite particularly hard in the UK,” he says. However, he added that after a difficult period over the next couple of years, he sees no reason why the UK cannot return to being a “relative outperformer”.
Meanwhile, Ernst & Young said that despite profit warnings from British companies tailing off during 2009, UK plc still faces a “bumpy ride”.
Andrew Wollaston, restructuring partner at Ernst & Young, said: “Given the depth of the slump, recovery has certainly come quicker than we might have anticipated. This rapid economic recuperation, along with previously depressed earnings forecasts, is helping companies beat expectations and keep profit warnings low. Good news for UK plc, but this is not the end of the story. Rapid recovery costs and 2010 is when we start paying. Brace yourselves for a bumpy recovery.”
