Economists outline plan for "Green New Deal"

A group of leading environmental and economic experts have today called for the launch of a "Green New Deal" capable of steadying the listing global economy and accelerating the development of a low-carbon economy.

The group - which includes former Friends of the Earth director Larry Elliott, Solarcentury founder Jeremy Leggett, Guardian economics editor Larry Elliot and Andrew Simms of think tank the New Economics Foundation - has released a wide ranging report arguing that major reforms to the global financial system are required to tackle the "triple crunch" of tightening credit conditions, rising oil prices, and accelerating climate change.

"The most serious global crisis since the Great Depression calls for serious reform – the like of which has not yet been considered by politicians," the group claimed in a statement. "This entails re-regulating finance and taxation, plus a huge transformational programme aimed at substantially reducing the use of fossil fuels and, in the process, tackling unemployment and decline in demand caused by the credit crunch."

Central to the report's recommendations is the development of a global Green New Deal investment programme, modelled on the original New Deal launched by President Roosevelt as a response to the Great Depression of the 1920s.

It proposes a huge increase in investment in renewable energy and the creation of a "carbon army" of green collar workers, paid for through a windfall tax on the profits of oil and gas companies, a carbon tax on fossil fuels, a clamping down on corporate tax havens, and the launch of new financial products such as Local Authority green bonds, green gilts and green family savings bonds.

The report also argues that the Green New Deal should be supported by an overhaul to the global financial system, designed to avoid a repeat of the global credit crunch, which it claims has resulted in billions of pounds of public money being diverted to prop up failing banks, such as Northern Rock. It advocates the breaking up of mega banks, which it claims have become "too big to fail", into smaller institutions that are more competitive and "are small enough to fail without creating problems for depositors and the wider public".