A leaked Whitehall assessment has revealed that the UK’s rush to achieve net zero could wipe 10 per cent off economic growth by 2030 and potentially trigger a financial crash.
The never-before-published Government document contains stark warnings about the economic consequences of poorly planned carbon neutrality efforts.
It contains stark warnings about the economic consequences of poorly planned carbon neutrality efforts
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The document was prepared by the Business and Trade Department in November 2023.
The report warns that hundreds of billions of pounds worth of assets worldwide may need to be retired up to 30 years before the end of their useful life.
This could cause market meltdown due to sudden drops in company values, affecting both British firms and overseas investors.
The document highlights that the financial risk of these “stranded assets” is “not yet fully reflected in companies’ values”.
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It claims the transition to Net Zero by 2050 comes with the ‘potential risk of destabilising the financial system’
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Energy Secretary Ed Milliband is pushing forward with the Net Zero goals
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According to McKinsey analysts cited in the report, up to “$2.1trillion worth of assets” globally may have to be set aside.
Coal-fired power plants would need to retire 10 to 30 years earlier than planned to meet Paris Agreement targets.
Britain has already retired its coal plants, but impacts on other countries could still affect UK markets.
The report also warns that the net zero transition could lead to “unemployment and skills mismatches” with negative impacts on growth and productivity.
It raises concerns that the UK is poorly positioned for this shift due to sluggish global investment.
The never-before-published Government document contains stark warnings about the economic consequences of poorly planned carbon neutrality efforts
PA
Perhaps most alarming is the projected impact on GDP, with the document stating: “Estimates suggest that by 2030, 10 per cent of GDP (one per cent annually over ten years on average) will have been subtracted from consumption.”
The assessment acknowledges increased government debt is likely, noting: “The level of investment required and need for redistribution means government debt is likely to increase as a result of the transition to Net Zero.”
In response to the leaked assessment, Shadow Business Secretary Andrew Griffith said: “This official government advice admits these policies will hit the poorest hardest, could cause a massive shock to the economy, destroy growth and cause trillions of pounds of perfectly good business assets to be written off.”
He challenged the Labour Government: “Does it regard taking a wrecking ball to the UK economy a price worth paying?”
A Government spokesman defended the net zero strategy, stating: “Net zero is the economic opportunity of the 21st century, and will deliver good jobs, economic growth and energy security as part of our Plan for Change.”
