Recent global crises have exposed the UK’s reliance on fragile international supply chains. In this blog, Phil Tomlinson, David Bailey and Paddy Bradley examine the government’s new industrial strategy, shaped by “securonomics,” and assess its efforts to strengthen domestic capacity, diversify suppliers, and boost resilience—raising key questions about whether current plans are enough to secure the UK’s economic and strategic future.
Phil Tomlinson is Professor of Industrial Strategy and Co-Director Centre for Governance, Regulation and Industrial Strategy (CGR&IS) at the University of Bath and David Bailey is Professor of Business Economics at University of Birmingham. and Paddy Bradley MBE, an Industrial Fellow at the School of Management, University of Bath, having previously worked education, local government, economic development and business support. This article is republished from The Conversation under a Creative Commons license. Read the original article here.
Brexit, COVID, the war in Ukraine and now Trump’s tariffs have all highlighted how vulnerable life in the UK is to disruptions in trade. Everyday items that people rely on can be subject to major shortages, delays and price rises, due to something as simple as a ship getting stuck in a canal.
This is because the UK is hugely reliant on other countries to provide much of what it needs. Medical supplies, cars, electronics and fruit are just a few of Britain’s favourite things that it tends to buy in from elsewhere.
Global supply chains deliver lower prices and wider choice to consumers but they are also often highly complex. In the car industry for example, components may move within and between companies and cross national boundaries many times, before ending up in the final assembled vehicle. This can make them vulnerable.
In response to the disruption of recent years, Chancellor Rachel Reeves has long been arguing for what she calls “securonomics” – investing in domestic energy sources and resilient networks. So perhaps it was no surprise that the British government’s new industrial strategy plans emphasise the importance of supply chain security.
A new industrial competitiveness scheme for example, is designed to cut energy costs for the UK’s most energy intensive firms, which manufacture things like steel, ceramics and glass. This should help domestic supply capacity.
A reported £600 million has also been allocated to develop the UK’s logistics industry. And there is a proposal for a “national supply chain centre” to identify weaknesses, enhance domestic capability and build strategic international partnerships. Vulnerabilities and dependencies will also be more closely monitored.
Another focus will be to diversify critical supply chains by reducing the UK’s dependence on single supplier nations (such as China for rare earth elements or semiconductors). One option should be strengthening alliances with friendly nations (known as “friendshoring”) with the aim of embedding supply chains in places that can be relied upon.
The recently announced trade deals with the US and India, and signs of greater cooperation with the EU do offer some promise in this area. Trade deals help with supply chain cooperation, but could go further and include resilience initiatives (such as creating joint stockpiles of things like critical minerals) to reduce disruption in the future.
Manufacturing from home
On the domestic front, the UK could still do more to incentivise “reshoring” (bringing some manufacturing or production of goods back to the UK). Reversing decades of decline in these sectors would be challenging, and require a long-term investment in domestic capacity and skills. But it could also deliver a boost to jobs and growth, potentially in parts of the UK which need it most.
Given recent geopolitics, the government has also prioritised strengthening the defence supply chain, allocating £173 million of new funding on defence infrastructure and skills. Developments are at an early stage, but the recent UK-EU security and defence partnership is a welcome start. And more work will be needed to make UK-EU collaboration on building a resilient defence industry across Europe a reality.
Supply chains within that industry (and others, such as healthcare) can be vulnerable to cyberattacks and economic coercion from malicious groups and hostile foreign states. So enhancing cybersecurity in logistics and infrastructure will also be critical.
This will mean better protection for ports, customs systems and logistics software. There is some limited additional funding on offer for this, but more will be required, which in turn will open up new opportunities for firms in the cyber industry. Indeed, a “cyber cluster” of businesses is already emerging in central England from the government defence and technology campus at Porton Down in Wiltshire across to GCHQ – the national centre for intelligence and security – in Gloucestershire.
But with still much to do, overall Reeves has been right to stress the importance of supply chains. They are crucial to people’s jobs and homes, the medicines they need and the food they eat. And supply chain security is not just an economic issue. It is a strategic imperative for safeguarding the UK, its businesses and the welfare of its citizens.
The tone of the new industrial strategy reflects Reeves’s “securonomics” rhetoric. But how far this goes in actually strengthening supply chains and boosting their resilience remains open to question, especially in the context of limited resources and a chancellor keen to build a reputation for fiscal prudence.
All articles posted on this blog give the views of the author(s), and not the position of the IPR, nor of the University of Bath.
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