Evidence submission: Parliamentary inquiry on economic security

This response was developed by:

• Jenny Bird, Grantham Institute, Imperial College London
• Raffaele Della Croce, Centre for Climate Finance & Investment, Imperial College Business School
• Dr Ajay Gambhir, Accelerator for Systemic Risk Assessment (ASRA); Grantham Institute, Imperial College London

This evidence was submitted to the Economic Security, Arms and Export Controls Sub-Committee to scrutinise the approach to economic security within Government, whether it is fit for purpose in the current geopolitical climate, and how the UK can most effectively work with international partners to balance security and prosperity. The Grantham Institute's submission focused on the risks climate change poses to economic security. 

Headlines

• Unavoidable climate change will pose direct and indirect physical risks to the UK (including extreme weather, heatwaves, rising sea levels, health impacts, water scarcity, supply chain disruption and damage to infrastructure).
• These risks threaten economic stability in a number of ways:
• Corporate exposure to physical risks
• Household exposure to physical risks
• Risks to the financial system
• Direct and indirect fiscal risks.
• Some estimates of potential impacts to GDP exist, but there are limitations to economic modelling which mean that these are likely to be at the lower end of possible outcomes and that economic damages may be more severe.
• The risks posed by climate change impacts may be higher than is commonly realised because of limitations in modelling and data availability.
• The UK does not yet have targets or standards to set out the desired level of resilience to climate impacts.