The Impacts of Climate Risk on the UK Economy: Time-Varying Evidence

This paper investigates the macroeconomic effects of climate change in the United Kingdom using a TVP-VAR model, which captures the evolving relationships between climate risk and key economic variables. To achieve this, we employ a novel Climate Risk Score Index. Our results demonstrate significant and time-varying impacts of climate risk on economic policy uncertainty and GDP, with pronounced effects observed during the Global Financial Crisis and the 2016 Brexit referendum. These findings underscore the importance of adaptive policy frameworks.