Growth raises incomes, jobs and public services

1. Growth raises average incomes, so households can buy more goods and services than they could before.
2. Expanding firms take on more workers, so employment rises and unemployment tends to fall.
3. Higher output gives the government more tax revenue at unchanged tax rates, which can fund schools, hospitals and transport.
4. Over time growth reduces absolute poverty, because more people are in paid work and real wages are higher.
5. Growth also pays for the things that reduce its own costs, since cleaner technology and better public transport have to be funded from somewhere.

Fast growth can push up prices

1. If demand grows faster than the economy can produce, firms raise prices rather than output, so growth spills into inflation.
2. Inflation cuts the value of money incomes and of savings, so part of the gain from growth is taken straight back.
3. Growth driven by borrowing rather than by added capacity is the kind most likely to do this.

The gains are not shared out evenly

1. The gains from growth often go mainly to firm owners and to workers with scarce skills, which widens inequality.
2. A rising average income can therefore sit alongside no improvement at all for people on the lowest incomes.
3. Growth also changes which jobs exist, so workers in a shrinking industry can end up worse off in absolute terms while total output rises.
4. Those effects never appear in the GDP figure itself, because it records the total and says nothing about the distribution.

Sustainability asks whether growth can last

1. Economically, growth built on investment, skills and technology can continue, while growth built on extracting a finite resource stops when the resource does.
2. Socially, growth that leaves large groups behind builds political pressure against it, and can cost more in poverty and ill health than it adds in output.
3. Environmentally, more production usually means more emissions, more waste and more pressure on land, and none of that is deducted from the GDP figure.
4. Those environmental costs often fall on later generations, which is what makes them easy to leave out of a decision taken today.

How far the benefits outweigh the costs

1. It depends on how fast the growth is, because slow steady growth is far less likely to trigger inflation than a rapid boom that outruns the economy's capacity to produce.
2. It depends on where the growth comes from, because growth from investment, skills and technology adds capacity, while growth from depleting a resource borrows output from the future.
3. It depends on how the gains are shared, because broad based wage growth raises living standards for most people while concentrated gains widen inequality.
4. It depends on the state of the economy beforehand, because growth that pulls people out of unemployment brings a large gain, whereas growth in an economy already at full capacity mainly raises prices.
5. It depends on whether the environmental cost is counted, because output measured without its emissions and waste looks more valuable than it is.
6. Overall: steady growth built on investment, skills and technology, with its gains shared widely and its environmental costs counted, benefits an economy far more than it costs it, but growth that is rapid, narrowly shared or built on running down resources can leave a country worse off once those costs are added up.