The policy response to the economic impacts of the current pandemic will shape the global economy through the ‘crucial decade’ for keeping the rise in global temperature from climate change to well below 2°C.
Addressing both crises successfully will require synchronised reforms to macroeconomic management, financial policy and financial institutions.
- The UK has a unique opportunity to make financial reforms which address the economic challenges of COVID-19 and climate change, both at national level and through its international leadership roles in 2021. Reframing economic analysis and planning to drive the required systemic change both globally and domestically involves formulating responses to these questions:
- What is the long-term strategy? What needs to be financed and how much investment is required to deliver this strategy?
- Who will finance it? What are the roles of private and public finance, and of national and international actors?
- How will finance be delivered? What systemic changes are needed to ensure that finance is delivered where it is needed, and at the scale and pace required?
- Although these may seem obvious questions, answering them requires a fresh approach to economic planning. Long-term goals need to be identified and synergies between different elements of the economy understood.
- Based on these questions, this paper sets out two key recommendations relating to a range of domestic and international policy opportunities, and proposes associated actions which will help drive the UK’s economic recovery from the COVID-19 crisis, set a precedent for other countries to follow as an action for COP26, and mitigate the economic risks of climate change.
Our two key recommendations are:
- The creation of a UK plan for financing climate resilience and net-zero emissions by 2050 as part of wider economic recovery plans;
- Inclusion of macroeconomic management within the UK’s COP26 Presidency finance priorities.