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’.
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.
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.
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.
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.
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.
#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.