A report by the Green Finance Institute has warned that the continued destruction of nature in the UK could lead to a 12% loss of gross domestic product (GDP) by the 2030s, potentially exceeding the economic impacts of the 2008 financial crisis and the Covid-19 pandemic. The 2008 crisis reduced UK GDP by about 5%, while the pandemic cost 11% in 2020.
The report, which received input from academics and government experts, argues that gradual environmental degradation is as detrimental as climate change. It examines three scenarios: domestic environmental breakdown, international risks from nature destruction in key trading partner countries, and a health scenario focusing on a potential new pandemic. Current trends in water and air pollution, soil erosion, and biodiversity loss could cut GDP by up to 3% (around £70 billion) by the late 2020s.
Adding acute risks such as floods, droughts, and wildfires could result in a 6% GDP loss in the domestic and international scenarios, and a 12% loss in the health scenario. The report warns that UK banks may need to reduce exposure to affected industries to avoid increased loan losses, with about 50% of extra costs stemming from overseas nature loss affecting food and resource supply chains.
Environment Minister Richard Benyon stated that nature “underpins the health of our economy” and is under threat, calling on all sectors to act. Shadow Environment Secretary Steve Reed blamed the government for the UK becoming “one of the most nature-depleted countries in the world” and committed Labour to reversing environmental destruction. The report was partly funded by the government and involved the Treasury, Defra, the Bank of England, and other institutions.
