Macroeconomic Policy

Beyond Growth

Good morning from New Economy Brief. 

For as long as we can remember, ‘growth’ has been seen as synonymous with economic success, and the Gross Domestic Product - GDP - the de facto measure for the economic health of nations. Growth is one of Rishi Sunak’s five priorities for 2023. Keir Starmer wants Britain to be a “growth superpower”. Being part of an ‘anti-growth coalition’ became the political insult of 2022. A policy platform that isn’t focused on growth, or indeed actively opposes it, would be politically unthinkable. Or would it?

This week, MEPs, policy wonks and campaigners have gathered in Brussels to imagine what a “post-growth” Europe could look like. The ‘Beyond Growth’ conference is evidence of a growing movement which argues that exponential growth cannot be sustained in the face of a climate emergency and growing inequality. But can post-growth (or degrowth) become mainstream? Are there alternatives? And is there genuine political appetite for it? 

The problem with growth. Current debates around the limits of growth date back as far as the 1960s and 1970s, with the Club of Rome’s 1972 paper Limits to Growth seen as a seminal publication that has since been successively revised and republished. The central tenet of the paper and subsequent arguments for degrowth is that exponential economic growth cannot be decoupled from resource and energy use. In other words, if the commitment to growth continues, finite resources will run out and irreparable damage will be done to the environment and nature. In 2016, the Limits to Growth APPG found that the predictions in the Limits to Growth paper are essentially still correct and that new understandings of planetary boundaries have added new dimensions to the challenge. A 2009 study by the Stockholm Resilience Centre identified “planetary boundaries that must not be transgressed” in order to “prevent human activities from causing unacceptable environmental change”. An update of the research in 2015 found that of the nine planetary boundaries identified (climate change, ocean acidification, biodiversity loss, interference with global nitrogen and phosphorous cycles, ozone depletion, global freshwater use, land system change, atmospheric aerosol loading and chemical pollution) four have already been crossed. These boundaries have been incorporated into the Doughnut concept by Professor Kate Raworth, setting an ecological ceiling above a social foundation and outlining a safe ‘space in which humanity can thrive’. 

  • The problem with GDP. When we talk about growth, we generally mean the monetary value of goods and services produced in an economy - or GDP. However, this “ultimate yardstick of economic performance” not only fails to account for economic harms but makes us “lose sight of what actually contributes to a happier, more prosperous society and a healthier environment” such as by ignoring non-monetised yet essential activities such as unpaid domestic work and childcare, argues NEF’s Lukasz Krebel. What’s more, the often used GDP per capita statistic is an inadequate tool for measuring how prosperity is shared out in society, says Krebel: “higher GDP doesn’t necessarily mean a better life for all of a country’s residents, since how the economic pie is shared is often extremely unequal”. Even the ONS has highlighted the limitations of GDP and its failure to take account of “things like social, natural, or human capital – things which all improve our lives and contribute to our happiness and health”. 
  • The Great Decoupling. One argument for the inadequacy of GDP is the decoupling of wage growth from GDP (sometimes referred to as the ‘Great Decoupling’). A 2018 OECD paper found that “on average across 24 OECD countries, real median wage growth has decoupled from productivity growth”. Advances in technology were cited as a “downward pressure on median wages” but also “‘winner-takes-most’ dynamics as labour shares at the technological frontier have decreased and between-firm wage dispersion has increased”. 

So what exactly are we talking about when we talk about degrowth? Faced with growth’s harmful effects on planetary boundaries, degrowth proponents advocate strategies which seek a deliberate and planned contraction in the economies of high-income countries with the ultimate ambition of a steady-state economy. It is argued that the reduction in the materials and energy produced by economies can be achieved without negatively affecting living standards. Central tenets of degrowth proposals are equitably sharing out resources, and reducing consumption and income by reducing working time. 

  • Growth, but not as you know it. There are some who believe that growth can be decoupled from its harmful effects and can therefore still be pursued. Proponents of ‘green growth’, for example, argue that it is not economic growth per se that is impossible, but only its current patterns and forms. There is some evidence that economies such as the UK are experiencing a degree of relative decoupling of economic growth from carbon emissions, although this should be taken with a pinch of salt. Many countries like the UK have essentially ‘offshored’ emissions by importing carbon intensive products from economies where growth is still very much positively associated with carbon emissions. Advocates, such as the World Bank, say that growth is still necessary to eradicate poverty and improve living standards and, with renewable energy and resource-efficiency, can exist safely in a ‘circular economy’. An extension of this is ‘inclusive growth’, which the OECD defines as ‘economic growth that is distributed fairly across society and creates opportunities for all’.

Political implications. The line-up of the Beyond Growth conference alone shows that the post-growth debate is no longer happening at the fringes of politics and economics. The event is the initiative of 20 cross-party MEPs with speakers including President of the European Parliament Roberta Metsola and Deputy Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) Pedro Manuel Moreno. Just last month, the Irish President, Michael D Higgins, condemned neoliberalism and the “obsession” with growth. However, while degrowth may be becoming less taboo, it is by no means mainstream. Polls show that growth is still popular with the UK public, leaving little motivation to the main parties to make the case against it. A poll conducted by Ipsos MORI last year found that while 49% of those surveyed said that economic growth does more good than harm, only 17% said the opposite. 

  • But… the public aren’t quite as pro-growth when faced with its associated harms. In the same Ipsos MORI poll, 43% said that more focus should be placed on protecting the environment, even if that harms growth, with only 29% saying the opposite. The Covid pandemic may also have played a role in realigning many people’s attitudes to growth, too. A poll conducted by YouGov on behalf of Positive Money in May 2020 found that more than 8 in 10 thought that the UK should prioritise health and wellbeing of citizens over GDP during the coronavirus crisis. When asked whether the UK should prioritise improved social and environmental outcomes over GDP when pandemic is over, 60% agreed. Whether its pandemics or the climate, could the crises we face spell the end for the pro-growth consensus?
  • Messaging matters. As with all political and economic ideas, how it is explained really matters. A study of framing around post-growth models for example has found that the phrase ‘green economy’ is as popular as ‘economic growth’ while the idea of ‘degrowth’ is much more mixed. 
  • Everyone’s a winner. The political appeal of the idea of growth until now is that it allows for a story where everyone gets better off, without having to confront the tricky politics of redistribution, which are central to any post-growth model. This dynamic is difficult to break. However, the above polling evidence, alongside the effect of the great ‘decoupling’ and greater awareness of climate harms do suggest that models that decentre growth may gain traction in the coming years. This might at first look more like Keir Starmer’s pledge to introduce new measures of national wellbeing and value them equally alongside growth, but the idea of questioning growth is certainly no longer confined to the fringes of the debate.
Weekly Updates


National Energy Guarantee. The Social Guarantee have produced a new video explaining NEF’s proposal for a National Energy Guarantee, where everyone is given a free energy allowance to cover 50% of their essential needs. This policy lowers bills for 88% of people, lowers carbon emissions and reduces the change of future energy shocks.

Monetary policy

Bank of England continues to increase interest rates. The Bank of England’s Monetary Policy Committee voted to increase interest rates a further 0.25% to 4.5%. IPPR’s Carsten Jung argued that, instead of relying solely on the Bank of England to address inflation by raising interest rates, the government should take more proactive measures such as implementing price guarantees and excess profit taxes to alleviate inflationary pressures and provide assistance to households. Positive Money’s Fran Boait explained why blunt economic policies like raising interest rates won’t bring down the underlying drivers of inflation. She also argued that a windfall tax on banks in line with the 35% rate on energy companies would have raised an estimated £14bn this year.

  • Increasing interest rates harms financial stability. Josh Ryan-Collins explained the current tension between contractionary monetary policy and financial stability: ”we have a monetary policy regime that creates rapid and large movements in asset prices—often resulting in financial instability—in order to slowly and weakly effect its actual target: consumer prices. This is a serious design flaw.“ He proposes greater use of fiscal policy to control consumer and asset prices to combat the twin threat of rising inflation and financial instability. (Read our recent New Economy Briefing on the effect of interest rate rises on the economy.)


The right to disconnect from work. The Labour Party have proposed a new ‘right to switch off’ so workers can enjoy more work-life balance outside of working hours, echoing legislation enacted in France in 2017. Autonomy’s paper from 2021 explains the evidence base and international precedents for such a proposal.

CEO Pay. Julia Hoggett, CEO of the London Stock Exchange, sparked controversy last week warning that UK CEOs are paid too little by international standards and restrictions on executive remuneration are adversely affecting the UK economy. The High Pay Centre explains that “there remains limited evidence of executives fleeing overseas due to low pay in the UK. And while executives in the UK are paid significantly less than in the US, they remain amongst the best paid in Europe.“


Wealth tax can pay for UK’s share of loss and damage fund. According to an analysis conducted by Christian Aid, implementing a tax of 5p for every £10 of wealth exceeding £1 million from individuals would generate £15 billion annually by 2030. This amount significantly surpasses the projected UK contribution of $15 billion (£12 billion) to the new fund, as reported by the anti-poverty campaigners.

Public services

#BreakfastCantWait. This week, Magic Breakfast has launched the #BreakfastCantWait campaign in Scotland which calls on the First Minister, Humza Yousaf, to keep the breakfast promise the Scottish Government made two years ago, and commit to implementing universal breakfast provision in primary and special schools across Scotland. Magic Breakfast is also holding a webinar at 9:00am on 23 May 2023 drawing together thought leaders from child poverty and food insecurity sectors to discuss and share best practice in championing the voice of those with lived experience in policy making. You can register for the webinar here.