Analysis shows that investing in a post-Covid-19 green economic recovery benefits Hungary
New analysis produced by Cambridge Econometrics shows that Hungary and the Visegrad countries can benefit from five key tools for a post-Covid-19 green economic recovery.
The white paper was presented at an online roundtable event hosted this morning by the British Embassy of Hungary. Among the attendees were Hungarian decision-makers representing the Ministry of Innovation and Technology, the Hungarian National Bank, the Hungarian Energy, the Public Utility and Regulatory Authority and the Budapest Stock Exchange.
Organised by the British Embassy in Budapest and global economics consultancy Cambridge Econometrics, representatives of the Hungarian government and financial sector discussed the tools highlighted by the paper with UK experts from the University of Exeter, University College London, the New Economics Foundation and the Corporate Leadership Group Europe. At the online event, opened by British Ambassador Paul Fox, participants expressed their commitment to supporting green recovery programmes that could create even better economic and environmental conditions for Hungary compared to the pre-pandemic period.
In his opening remarks, British Ambassador Paul Fox said:
The pandemic offers both the UK and Hungary an historic opportunity to “build back better”, and the transition to net zero is an essential component of that. We look forward to working with Hungary and its V4 Presidency to harness the benefits of this transition in areas that are key for a green economic recovery. Hungary has already passed a significant milestone by announcing its accession to the Powering Past Coal Alliance earlier this month, and we will continue to offer our support and expertise in other areas where it is forging ahead, such as green finance, smart cities and energy innovation.
The white paper showed that green, sustainable solutions lead to greater economic growth and also create more jobs. Based on separate economic modelling analyses for the UK, for EU member states and for the Visegrad countries, Cambridge Econometrics presented five tools for the green relaunch of the economy, which would benefit Hungary in the short- and long-term recovery from Covid-19.
- Public investments in energy efficiency – these have an economic recovery effect primarily in the short term. They also serve to create jobs as, for example, the insulation of buildings can be used to relaunch construction activities that have stopped during the pandemic, creating lower-skilled jobs.
- Increased subsidies to expand solar and wind energy, which could reduce emissions across Europe.
- The modernisation of energy networks, making them suitable for the greater use of alternative energy.
- A new car programme that encourages the purchase of electric vehicles only – this would have the biggest impact on economic growth.
- Tree planting and forestation programmes – as the pandemic increased unemployment among the low-skilled the most, such programmes would primarily create new jobs in this area. Furthermore, in areas that require low-skilled jobs, more jobs could be created from the same amount of subsidies as, for example, in the car industry.
The Covid-19 pandemic may result in an 8-9 percent decline in GDP in EU member states. Countries can make up for roughly half of that by more usual methods until 2030. However, the impact of green economic recovery programmes would be felt as early as 2021, and by 2030, economic production would be only 2 percent behind the pre-pandemic period.
The benefits of sustainable renewal are also clear in terms of job creation: by 2030, one million additional jobs could be created across Europe through programmes that consider green aspects too.
The effects of green measures vary from country to country. Their main effect for the Visegrad countries, including Hungary, is that they would reduce the time needed to return to the pre-pandemic levels of economy and employment.
Read the five key takeaways from the online roundtable here.