The Times They Are A-Changin’ - But What Does this Mean for Future UK Foreign and Trade Policy?

By Stuart Carroll 

It was Bob Dylan, with all his melody and jingly jangly brilliance, that pronounced to the world that "the times they are a-changin’".  How true and apt this artistic masterpiece is to the world today.  The coronavirus crisis, with all its unprecedented ramifications, has delivered changing times with no immediate and clear endpoint.  It has also placed the importance of global public health under the microscope and the relative effectiveness of the UK Government's response. Once through this crisis, there will rightly be a full autopsy of decisions made and lessons learnt.  In doing so, a light must also be shone on Britain's foreign and trade policy, not least because this uncompromising virus has accentuated just how interconnected our world is and how the future will now demand a "new normal". Yet before that autopsy takes place, there are some key items that should be on the diagnostic list to start the process of reshaping future UK international relations.  Indeed, this crippling pandemic has highlighted weaknesses and deficiencies in the UK’s relationship with the rest of the world.  This is most notably the case in terms of trade policy, manufacturing and supply chain, which in turn have undermined the UK’s speed and quality of response.  

Policy Exchange

First, the UK economy has excessively, like many countries, been too dependent on Chinese trade.  In 2018, UK exports to China were worth £22.6 billion; imports from China were £44.7 billion, resulting in a trade deficit of -£22.1 billion. Critically, so much of this trade has been on essential, basic items including consumer goods.  The same picture emerges with the EU where there was a £72 billion deficit in 2019.  Although the UK is a net exporter of services, it is a net importer of manufacturing.  It is little surprise therefore that the UK has struggled sourcing critical supplies, including PPE and testing, given the impact on China and the fact countries have defaulted to servicing domestic imperatives amidst the crisis.  This highlights not just a public health and defence weakness in the British economy, but also a fundamental economic problem and an outmoded approach to risk management.  

Indeed, this lopsided position is a consequence of the basic structure of the UK economy. It has for many decades become a service and property based economy devoid of a solid manufacturing base. Although few would credibly argue that the lame duck industries of the 1970-80s should have been inefficiently sustained, the UK has lacked a vision of a post-industrial revolution particularly in the major Northern cities with enormous economic and social consequences.  Little wonder so many voted Brexit having craved a desire to be freed from a red-taped and sclerotic EU and having sounded a beating call to our political elite to think differently about those left behind.  

The brutal truth is the UK is hardly an advert for making stuff despite some niche examples of excellence and a strong digital sector. This has badly hindered the ability and speed of response during this crisis, but also points to a bigger weakness in terms of the UK’s dwindling competitiveness and scope to future-proof against exogenous shocks. This needs urgent attention and radical change.   

A lack of production capacity has also adversely affected the UK’s supply chain, encumbered by a lack of manufacturing and the associated agility and flexibility seen in other counties. In the life sciences sector, now so critical to the immediate response but also longer-term value added, the UK has a gaping hole with so little vaccine and medicine manufacturing.  Such critical activities and expertise have, over the last 20 years, left the UK as pharmaceutical companies have moved operations abroad to places such as Ireland and Singapore that boast more competitive corporation tax rates, tax credits for R&D pull through, and more versatile regulatory frameworks.  Like a football team tactically stuck in the past, the UK has continued to play a “4-4-2” formation when much of the world has adopted more progressive systems and strategic formations.  

It should be axiomatic that the UK’s economic policy, and moreover its lack of a dynamic and competitive industrial policy, have driven a narrow trade and foreign policy, which has left the UK squeezed in an interconnected world.  This has placed the UK in a vulnerable, and often invidious, position lacking influence on the big foreign policy issues as the economic reality demands dealings on skewed terms with the likes of China. Indeed, the UK’s energy policy, although showing signs of progression, is grimly dependent on Russia and also the Middle East. This lack of self-sufficiency needs urgent correction and that must start with the economy.  Without it, the UK will struggle to ride the waves of global change coming and will, as Bob Dylan also once bellowed out, be left “blowin’ in the wind”.  

Stuart Carroll is a Cllr in the Royal Borough of Windsor and Maidenhead where he leads on Adult Social Care, Health, Mental Health and Children Services.  Professionally, he is a senior health economist and epidemiologist specialising in international health and policy.  

Stuart Carroll

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