UK trade policy in 2030, a retrospective

The last ten years of UK trade policy have been fun for trade nerds, less so for everyone else.

The global trading regime failed to bounce back from the Donald Trump-era of trade wars and wanton destruction, with Democrats sharing many of his concerns about Chinese trade practices and the World Trade Organisation’s (in)ability to constrain them. Early-decade disagreements over the use of Huawei technology in critical infrastructure were but a precursor to a new era in which trade policy and national security issues became increasingly intertwined. Trade war tariffs did fall away eventually, but were replaced by restrictions on data transfers as America, Europe and China failed to reconcile their fundamentally different understandings of personal privacy.

Amidst all of this, the UK found itself out on its own, untethered from the EU. It initially prioritised bilateral free trade agreements with the US, Japan, Australia and New Zealand, and eventual accession to Comprehensive and Progressive Trans-pacific Partnership (a plurilateral trade agreement between eleven countries) – not so much as a means of unlocking new trading opportunities, but instead to lock in, and shore up, existing rules and liberalisation in an increasingly uncertain world.

Yet the Europe question was never really put to bed. The latter half of the decade was spent refining, and re-negotiating Britain’s relationship with the EU. Despite the initial rupture, the EU’s regulatory gravity-well proved hard to break free of – with the UK largely (with the exception of food standards, where it adopted a different approach in order to strike a trade deal with the US) staying in lockstep with the continent in an attempt to remain plugged into pan-European manufacturing supply chains.

Results were mixed. British research capabilities ensured it continued to be a significant regional player in the life sciences sector. But despite government support for electric vehicles and battery technology providing some reprieve for the struggling auto sector, ultimately its British footprint shrunk as additional trade friction with the continent diminished the business case for a continued UK presence.

Just as the aftershocks of the 2007 global financial crisis were felt for years afterwards, so too were the consequences of COVID-19. The economic shutdowns introduced to contain the virus caused irreparable damage. The resultant, global, restrictions on the movement of people took the wind out of the UK’s services sector. The firms that managed best were those with a significant local presence in the foreign markets they were selling to. But closer to home, British exports of educational services were particularly badly hit with foreign students opting to study closer to home. By 2030 British exports of educational services had collapsed – with only the most prestigious of British universities able to attract foreign students in the same numbers they had before.

The UK did what it could to stay afloat: in order to bolster its faltering services sectors, Britain jettisoned the anti-immigration dogma of the past and opened its borders to people from all over. This did not happen overnight, and ultimately required the defenestration of the Home Office. The eventual opening up of the UK’s immigration regime was widely celebrated by business groups.

Positively, forward-thinking government investments in frontier industries such as tidal energy production eventually proved their worth, as the UK developed a unique base of expertise that it was able to sell across the world. Yet while financial services remained of outsized importance to the British-economy, the City saw much of its EU-focused economic activity drift away to the continent.

Remaining open to trade, people and ideas was far from easy. COVID-19 fuelled a political and public backlash to openness - ostensibly under the banner of reducing reliance on foreign imports of essential medicines, food and equipment. To varying degrees, the US, EU and Japan introduced policies designed to forcibly onshore supply chains. While the UK initially made limited attempts to do similar, it quickly found it did not have the pull-power of the larger economies.

Technology continued to disrupt, conspiring to both lengthen and shorten supply chains at the same time. Advancements in robotics and video conferencing made it easier to sell services over long distances. But the rollout of 3D printing – combined with decreasing wage differentials between the developed and less developed world – succeeded in pulling some manufacturing supply chains closer to home. The unpredictability of this so-called ‘third wave’ of globalisation caught the public by surprise. Unlike previous waves, those who found their jobs subject to fresh competition from people abroad (or robots) tended to be white collar workers such as lawyers, accountants and financial analysts who had vast pools of political capital which they tapped to argue in favour of new trade barriers and protections.

British politicians opened the decade with grand claims of so-called Global Britain and taking to the seas, but the following ten years were more akin to a gruelling slog. International uncertainty became the new normal for British exporters and importers, and only the most resilient thrived. There were some notable successes, but as is usually the case when it comes to trade policy, much of the time it felt as if the UK was caught running faster and faster, all in an effort to stand still.