The Economic Impacts of UK Labour Productivity-enhancing Industrial Policies and their Spillover Effects on the Energy System

Research output: Working paperDiscussion paper

Abstract

The wider impacts of energy policy on the macro-economy are increasingly recognised in the academic and policy-oriented literature. But this interdependence similarly implies that policy interventions in the non-energy system also affect the energy system, though such spill-overs have not been extensively researched. Increasing labour productivity is a key component of the UK’s Industrial Strategy. The present paper analyses the impacts of success in this policy on key elements of the economic and energy systems through simulation. It uses a UK computable general equilibrium (CGE) model - UK-ENVI – to fully capture economy/energy interdependence. The simulation results suggest that there are trade-offs, particularly between achieving energy and economic policy goals. For example, increased labour productivity stimulates GDP but also energy use and territorial industrial CO2 emissions, whilst reducing short-run employment. Policy makers should therefore be aware that successfully implementing the Industrial Strategy might impact on the UK’s Clean Growth Strategy and on the goals of energy policy more generally. Knowledge of the nature and scale of economy/energy spill-overs potentially improves policy co-ordination and over-all effectiveness. For example, this analysis reveals the extent of energy policy adjustment that would be required to accompany a successful industrial policy in order to maintain a given level of emissions.
LanguageEnglish
Place of PublicationGlasgow
PublisherUniversity of Strathclyde
Number of pages39
Volume19
Publication statusPublished - 1 May 2019

Publication series

NameStrathclyde Discussion Papers in Economics
PublisherUniversity of Strathclyde
No.5
Volume19

Fingerprint

Industrial policy
Energy policy
Spillover effects
Labour productivity
Economic impact
Energy systems
Spillover
Simulation
Energy
Interdependence
Policy intervention
Policy coordination
Growth strategy
Energy use
Economies of scale
CO2 emissions
Macroeconomy
Economic systems
Computable general equilibrium model
Short-run

Keywords

  • energy policy
  • industrial strategy
  • labour productivity
  • emissions

Cite this

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The Economic Impacts of UK Labour Productivity-enhancing Industrial Policies and their Spillover Effects on the Energy System. / Ross, Andrew G; Allan, Grant; Figus, Gioele; McGregor, Peter G; Roy, Graeme; Swales, J Kim; Turner, Karen.

05. ed. Glasgow : University of Strathclyde, 2019. (Strathclyde Discussion Papers in Economics; Vol. 19, No. 5).

Research output: Working paperDiscussion paper

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