Wind and wave power are set to be included in calculations of countries' economy size starting in 2030, following changes approved at the United Nations. The update aims to capture areas that have grown since the calculations were last updated in 2008, such as the cost of using up natural resources and the value of data. The last round of changes saw assets like oilfields start to be factored in under the rules.
In practice, the economic value of wind and waves can be estimated from the price of all the energy that can be generated from the turbines in a country. At the same time, calculations will begin to treat data as an asset in its own right, on top of the assets that house it like servers and cables. Ben Zaranko of the Institute for Fiscal Studies (IFS) calls it an "accounting" change, rather than a real change. He explains: "We'd be no better off in a material sense, and tax revenues would be no higher."
Coming into force in 2030, this update could mean an increase in estimates of the size of the UK economy, which would make promises to spend a fixed share of the economy on defence or aid more expensive. For example, if the new rules increase the estimated size of the economy by 2-3% in 2030, it might add £2 billion to Labour’s commitment to defence spending.
The UK government spending watchdog, the Office for Budget Responsibility (OBR), has confirmed that it will not be including the impact of these new rules on the government finances in its assessment this March. As such, the new rules will be a possible future headache for the Chancellor – rather than an immediate one.
