Mr. Sebastian Barnes:

It is not like a sort of separate issue that is on the side. It really is something that is going to have an integral effect on many things. These investments are needed but they will not necessarily generate a financial return to the Government. Some of them do, for example in the energy sector, but it is not just building a toll road in circumstances where you hope that you are going to get your money back. Some of this is just building flood defences, which is good because it will stop the cities being flooded, but you are worse off than if there had not been climate change. The returns in respect of a lot of this investment are quite uncertain as well, so there are a number of reasons why simply easing the fiscal stance because of the climate issue is not necessarily a good thing.

It would also run against the same economic constraints. Already we have very high public investment. If we were to create extra space for public investment on top without some offsetting reductions somewhere else that will contribute to overheating and stretching the supply side of the economy. If you look at it, one the achievements of the public finances, one of the good things about the way the public finances have evolved over the past couple of years, is that we have got to record levels of public investment as a share of national income, by our own standards, and very high levels by international standards and we have done that within the existing budget and within the rules. This shows that it can be done with appropriate management of the economy.