Labour’s first budget in 15 years included a highly anticipated change to the so-called fiscal rules which constrain how much the government can borrow or spend. By relaxing the rules, chancellor Rachel Reeves has opened the door for additional capital spending, much of which has been earmarked for low-carbon investment.
While there has been immense scrutiny of the budget’s £40 billion in tax increases, more relevant for net zero is around £100 billion of additional public investment over five years. From a climate perspective, it is disappointing that even a revenue-starved chancellor did not have the courage to increase fuel duty. But in terms of clean investments, the budget is bold, and forgoes easier wins for long-term competitive advantage.
The budget was largely industrial policy, meaning government efforts to shape the economy by targeting specific industries with a range of policy tools. And this was woven through with “green” initiatives.
