Merryn Talks Money Best of: Is There a Tradeoff Between Net Zero and UK Growth?
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Aug 8, 2025 Kallum Pickering, Chief Economist at Peel Hunt, dives into the contentious debate over the relationship between net zero ambitions and UK economic growth. He challenges the prevailing belief that these goals are compatible, suggesting that declining electricity availability may be stifling productivity and GDP. The conversation also explores the rise of AI's role in industrial productivity and the urgent need for energy security as demand grows. Pickering urges a reevaluation of energy policies to support both economic growth and sustainability.
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Electricity Decline Impacts UK Growth
- UK's productivity stagnation is linked to declining availability of electricity since 2005.
- Reduced electricity supply coincides with slow growth, weak productivity, and stagnant living standards.
UK's Unprecedented Energy Transition
- UK energy transition is unique in reducing total electricity capacity rather than adding energy sources.
- Decommissioning coal, oil, gas, and nuclear without timely replacement has led to a 20% drop in available electricity.
UK vs US Energy and Living Standards
- UK cut per capita energy consumption from 50% to 38% of US levels from 2005 to 2022 while living standards fell.
- US kept energy consumption stable and grew living standards, showing contrasting policy choices.