The UK Labour Party has firmly put the brakes on its pledge to invest £28bn ($35.2bn) per year into green projects and industries if it came to power, citing poor economic stability.
Shadow Chancellor Rachel Reeves told the BBC that she now plans to gradually increase investment over time if the party wins the 2024 general election, reaching £28bn in 2027. She added that after the Conservatives “crashed the economy” it was important not to be “reckless” with spending, saying that “financial stability has to come first”. Labour are currently on track in the polls for a landslide victory in the next election.
Labour pledged in 2021 to annually invest £28bn in green projects. Investment was initially set to begin after the election was won in 2024 and would continue until 2030. Reeves did not confirm an alternative sum for investment, stating that an economic picture would become clear closer to the time.
Various factors including the global fallout from Russia’s invasion of Ukraine and a post-Covid-19 economy have seen inflation soar as the Bank of England repeatedly raised interest rates throughout the last year.
Former Conservative Prime Minister Liz Truss’s mini-budget announced last autumn, which included proposals of billions of pounds worth of unfunded tax cuts, also aided upset in financial markets, weakening the value of the British pound and triggering a domestic financial crisis.
“The truth is, I didn’t foresee what the Conservatives would do to our economy,” Reeves said, discussing her change of heart. “We will get to the investment that is needed, but we have got to do that in a responsible way.”
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A senior Conservative source told the BBC that it wasn’t surprising Labour had diluted its pledge.
“The pledge was made when interest rates were at rock bottom,” they said. “To borrow £28bn each and every year for a decade would fuel inflation, and force [the Bank of England] to raise interest rates even further. It is the height of irresponsibility.”
They added there were “still issues with the pledge” and “a lot of deadweight cost where the private sector would have invested anyway”.