Why economic security must be at the centre of the UK’s trade strategy

Francis Fukuyama famously declared the “end of history” after the Cold War, arguing that liberal democracy and open markets would become the dominant global model.  

For three decades, global trade and British economic policy were shaped by that assumption. But a new power struggle between the US, China and Russia is rapidly reshaping the global order. Globalisation is being replaced with economic realpolitik – where trade, technology and capital are used as instruments of state power. 

Britain exposed 

This puts the UK in a particularly vulnerable position. We are one of the most open economies in the G7. That openness has generated growth, but it has also created dependence.  

88% of publicly listed UK companies depend on US tech providers for essential systems such as email, cloud services and data management. China’s leverage sits further upstream: in semiconductor supply chains, telecoms hardware, rare earth processing and battery technology critical to the UK’s industrial and energy future. This dual dependency leaves the UK vulnerable to economic disruption or political pressure if US-China trade tensions escalate. 

We are also home to world-class universities and research facilities, putting us at high risk of critical IP being stolen by hostile state actors that are trying to gain a strategic edge in this economic arms race.  

Modern economic threats unfold through joint research projects, university funding and corporate recruitment – making it hard to distinguish between genuine collaboration and espionage.  

To further complicate things, damage is cumulative. Knowledge is transferred gradually from the UK to hostile states, including sensitive military and defence information – and it’s often hard to detect until it’s too late. 

The hardest threat to manage is China, as it is both a critical economic partner and a national security risk. Since 2020, UK universities have produced thousands of joint publications with Chinese institutions linked to the military, including hundreds involving an entity sanctioned by the US. Chinese state-sponsored hackers compromised the phones of UK Government officials for years, and intelligence agencies have warned of sustained efforts to target British parliamentarians, research institutions and advanced technology firms.  

Despite this hostile activity, China doesn’t appear on the ‘enhanced tier’ of the UK’s Foreign Influence Registration Scheme – a category designed for states and actors that pose a heighted risk of harmful influence.  

Leaving China off the enhanced tier doesn’t automatically make the UK less secure. But it could cause confusion amongst businesses and universities around how cautious they need to be, which risks creating blind spots that Beijing is well versed at exploiting. 

Economic security is rising up the parliamentary agenda – but gaps remain

The Government’s latest trade strategy is built around “pragmatic patriotism”, seeking to promote Britain abroad while investing at home and diversifying partnerships. It is a sensible recognition that trade has become geopolitical.

But the UK still lacks a coherent, statutory economic security framework, leading the cross-party Business and Trade Committee to warn that Britain risks becoming the “weak link in western economic security defences”.

Mentions of “economic security” in parliamentary documents and transcripts have increased by 845% in the past six years. Data: Parallel Parliament.

The Committee’s report Toward a new doctrine for economic security made 25 recommendations to address structural weaknesses. The Government has agreed to implement only four, rejecting proposals for a dedicated Economic Security Minister and an Office for Economic Security.

This leaves in place a fragmented governance model that could hinder the sharing of crucial intelligence from across Whitehall, at precisely the moment when coordination is most needed.

Security is a prerequisite to growth – and it should be treated as such

Other advanced economies have recognised that fragmented oversight is no longer sufficient. Japan has created a dedicated economic security framework and minister, and the US and EU have aligned industrial policy, investment screening and export controls under clear strategic doctrine. In each case, economic security is treated as integral to growth and long-term strategic advantage.

For the UK, embedding economic security at the centre of our trade strategy would strengthen, not weaken, our growth ambitions. It would help increase investor confidence, protect critical intellectual property and ensure that the openness on which our economy depends does not expose us to avoidable risks.