How many times a day do we take our global connectedness for granted? I know I do. From the Teams call with a client on the other side of the world, to buying food from a far off land in your local supermarket, we’ve grown accustomed to great digital connectivity, global products and the benefits from cultural exports.
Yet as digital platforms, planes and cargo ships create connections we’re also living in an age of globalisation backlash.
The drivers of deglobalisation are numerous. War in Ukraine, the rise of populism and more businesses coming to the conclusion during the pandemic that supply chains are too long and often too reliant on one supplier or indeed one country.
These factors are driving the trend for the reshoring or onshoring of manufacturing, the need for additional supply chain resilience and a greater consideration about national resources, particularly in the context of energy security.
Simon Kuper writing in FT Weekend notes that trade peaked as a percentage of the global economy in 2008. His view is that we may actually yearn for 2007 because deglobalisation will make us poorer.
So if deglobalisation is here to stay here are some trends to look out for:
We may be entering an era of greater regionalisation of trade which will cause businesses to really look at who their partners are. Aside from weighing up the geopolitical risk of their location, they will be asking who do they want to depend on? Brand equity across borders and having a clear narrative of their proposition will be vital.
Reshoring could create more opportunities for high value manufacturing in the UK but it will also drive a need and greater appreciation for the role of logistics to support this ecosystem. It will require greater consideration in the planning system about the need for a sustainable pipeline of strategic employment sites.
It might, if there is enough political vision and traction for levelling up, help to create a multi hub economy with manufacturing, R&D and industrial centres of excellence located across the regions (the Midlands, South West, North East and North West), as well as the devolved nations.
This brings challenges and opportunity for UK infrastructure, real estate and policymakers. There is now more than ever a clear need for national, strategic spatial planning to steer investment. It should foster more joined up cross-industry planning within regions themselves across highways, rail, energy, industrial and residential development.
We will need to reallocate road space, deliver improved transport connectivity between regions and nations, and construct a more sustainable national logistics network which supports the hubs or clusters for innovation and production.
These are fragile and uncertain times where there is undoubtedly a need to think carefully about national capability and resources. The challenge is to ensure that doesn’t boil over to narrow nationalism. I personally hope the death of globalisation is greatly exaggerated. We are culturally and socially richer for it.
Matt Sutton is a director at Camargue