This article attempts to answer—as far as possible—the two following questions: Can we have any certainty about the future of growth? Assuming that the coming decades will be a period of weak growth fluctuating between an annual 1% growth and a stagnant GDP, can we still prosper? To answer these questions, a modelling exercise was carried out to investigate the links between the energy-climate nexus and the economy.
Highlights:
- GROWTH, A POLITICAL OBSESSION
In political discourse, from both the right and the left, economic growth is held up as the solution to economic and social problems, in other words as a sine qua non of individual and collective prosperity. For the proponents of this discourse, high growth is not only desirable, but is also achievable, provided we give our- selves the necessary means.
- DECLINING GROWTH RATES OVER THE LAST 40 YEARS AND AN UNCERTAIN FUTURE
The academic literature shows that beyond the current crisis, there is a good deal of uncertainty regarding the capacity of the different countries to restore high growth. Many factors, such as the expansion of the service sector, the pace and nature of technological innovation, and demographic change, all indicate that average growth within the European Union could be lower in the coming decades than over the last 30 years.
- ENVIRONMENTAL CONCERNS ARE ADDING TO THIS UNCERTAINTY
Sometimes, the gravity of environmental issues is seen as an opportunity to spur on a new industrial revolution to deliver growth; at other times, it is viewed as a constraint that would further slow down the economy. The modelling exer- cise carried out in this report studies the linkages between climate and macroe- conomics. It confirms the diagnosis of uncertainty surrounding the future of economic growth: under pessimistic but plausible assumptions for the coming decades (concerning energy resources, the cost of renewable energy, or lifestyle changes), the environment significantly reduces growth.
- PROSPERITY WITHOUT GROWTH, A POLITICAL AMBITION
This study shows that very low growth rates in the future do not imply forsa- king prosperity as it is conceived in European democracies. The linkages between employment, social protection, equity and wellbeing, on the one hand, and eco- nomic growth on the other, are less robust than is commonly thought. In terms of employment, some authors maintain that beyond the economic crises, it is not growth that generates jobs, but the opposite. In terms of self-reported wellbeing, or health outcomes, once a certain standard of living has been achieved, equality policies are a powerful force for progress, not growth. However, reducing eco- nomic inequalities and financing social protection are made more difficult in a context of low growth, which thus calls for a higher level of deliberation and arbi- tration. Ensuring prosperity in a post-growth world means more political action.
