Covid and climate – building a strong and sustainable recovery

A unique window is now open. Three actions will help lock in better growth and avoid the dangerous models of the past, write James Rydge, Nicholas Stern and Dimitri Zenghelis

 
The UK and the world have been transformed by the Covid crisis. Beyond its tragic human costs and loss of life, the pandemic and the necessary lockdowns have resulted in a sharp contraction of aggregate demand, supply disruptions, loss of revenues for many service sector businesses and unprecedented increases in unemployment.

The demand, output and employment impacts are expected to be much greater than the 2008 financial crisis, with truly global reach. The impact on many developing and emerging market countries could be immense and with potentially long-lasting and deeply damaging consequences. It has meant sharp declines in commodity prices, remittances and tourism, and reversals in capital flows. All of this has fuelled a deep loss of confidence and exacerbated vulnerability to other potential shocks.

Climate action must now be examined in the context of a real risk of a great depression. The immediate focus has to be in shaping and implementing rescue plans, with commensurate international support for countries that need it, and carefully designed lockdown exit strategies. But beyond the immediate emergency measures, governments will need to introduce more comprehensive, longer time horizon stimulus packages to promote recovery. There is an opportunity for investment in sustainable growth to be at the centre of a recovery strategy for the world, both in terms of restoring confidence and securing strong, resilient and inclusive growth and development that respect planetary boundaries. It will require focus and leadership, but a unique window is now open.

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Πηγή: blogs.lse.ac.uk

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