In the News Teaching Activity –the debate over the Labour party’s £28bn green investment pledge (Jan 2024)

Another Sky News explainer from Ed Conway - this time he takes a closer look at the fiscal implications of the Labour party’s pledge to spend £28bn on green investment.

According to the EU’s climate service, 2023 was the hottest year on record, about 1.48C above the long-term average; in the UK, the Met Office announced it was the second warmest year on record. There seems to be a case for more green investment. Running into elections, politicians make all sorts of promises and questions have been asked about the affordability of Labour’s £28bn green spending pledge. The Conservatives argue the £28bn investment will prevent their fiscal rule, requiring National-Debt-to-GDP ratio to be falling over the next five years, being met, implying Labour’s plan will damage public finances. However, even with this extra injection, the UK’s public investment levels are somewhat modest compared to other developed countries.

Labour's £28bn green spending pledge sounds significant but wouldn't be enough to prevent overall public investment falling | Business News | Sky News

1 Explain how an increase in investment affects economic growth.

2 Why is there a fiscal rule that the debt-to-GDP ratio should be falling?

3 Discuss the case for and against more green investment