“Why house prices may dip but will not crash” – Merryn Somerset Webb (FT January 15, 2021), contains the following sentence:
“In 2008, the UK spent 1.5% of gross domestic product to alleviate the global financial crisis; this time we have spent 26% of GDP.”
Just take a moment, 26% of GDP! This is breathtaking and the important point is that most of this money has been borrowed. The UK’s 2020 GDP is estimated by the World Bank at roughly $3 trillion (World Bank figures are US$ for comparative purposes). So, we have spent roughly $750 bn (£550bn) on Covid.
When it comes for additional government expenditure on achieving zero carbon this will inevitably have to be funded by additional borrowing in addition to this existing debt.
These numbers are enormous, my book came up with a figure of £1tn for the expenditure to achieve zero carbon in the UK and that is probably conservative. Financing this for government would have been a challenge, given the fiscal impact of Covid that challenge just got significantly greater.
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