Jun 9, 2023

Labour's Green Investment Programme

Explore the implications of Labour's green investment programme and why it is essential for economic growth. Find out why it is not fiscally irresponsible and how it can benefit society.

ECONOMICS ENVIRONMENT SUSTAINABILITY

simon wren-lewis

Professor of Economics. Also at @sjwrenlewis@econtwitter.net

Member of Economics

Labour's announcement today on phasing in its green investment programme may make practical sense, as it takes time to get things off the ground. However they also claim it is 'fiscally responsible'. This thread is on why that is a big political mistake. 1/6
— simon wren-lewis (@sjwrenlewis) June 9, 2023
The Tories, whatever Labour say, are bound to talk about a 'borrowing bombshell'. A solid and convincing response is that Labour are only borrowing to invest, and investing in worthwhile public projects is essential for growth, and never fiscally irresponsible. 2/6
— simon wren-lewis (@sjwrenlewis) June 9, 2023
What could be more essential than green investment to make energy cheaper, as the US and EU are doing? That is a clear line to take, and also happens to make good economic sense. If you can associate 'investment' with borrowing in voters minds you undermine 3/6
— simon wren-lewis (@sjwrenlewis) June 9, 2023
a lot of mediamacro's rhetorical power. Before today, that could have been Labour's line to take. When the media say 'how do you know the markets will not turn on you like they did on Truss/Kwarteng', the answer is they were borrowing 4/6
— simon wren-lewis (@sjwrenlewis) June 9, 2023
to fund tax cuts, while we are borrowing to invest, just as firms and homeowners do. Unfortunately today Labour have said spending £28 billion on worthwhile investment in its first few years would have been fiscally irresponsible, and could damage the economy. 5/6
— simon wren-lewis (@sjwrenlewis) June 9, 2023
They have undercut what would have been a sound defence in economic and political terms to the borrowing bombshell attack, and the 'what about the markets and Truss' attack. /end
— simon wren-lewis (@sjwrenlewis) June 9, 2023