Global supply chains are easily disrupted, as many businesses have discovered in the aftermath of the Covid pandemic. The longer and more complex the supply chain, the more scope there is for things to go wrong. Headlines around the world tell of shortages and production slowdowns due to the absence of crucial components.
Over the last three decades, as trade barriers lowered and transport costs fell, supply chains became increasingly global. With the formalisation of a global trade regime by the World Trade Organisation, it looked like this process would continue, with trade becoming ever more hassle-free. Entire businesses were built on the assumption that getting anything from anywhere in the world was relatively quick and easy.
The combination of political volatility, deteriorating international relationships and a global pandemic has reminded us just how fragile these trade arrangements can be. As the US retrenches and China becomes more assertive, the balance of power has shifted, and the global trade regime is changing to reflect this new reality.
At the same time, the demands of the global economy over the next decade will put more pressure on stretched supply chains. Adjusting to the realities of Carbon Net Zero targets imposed by governments means that many countries will want the same materials at the same time. With 21% of the world’s lithium in Afghanistan, 70% of its cobalt supplied from the Democratic Republic of Congo and 75% of semiconductors coming from China and Taiwan, one can easily envisage the potential disruption to supply chains from geopolitical events.
Brexit has given the UK and EU a foretaste of what happens when long-held assumptions about supply chains and trade barriers change overnight. Rapid changes in the rules of the game require equally rapid adaptation by businesses. Those that get caught out could see their business models collapse in short order. This new complexity makes global trade far more difficult but equally more critical to understand.
To bring some clarity and insight to this complex and rapidly changing situation, we are delighted to welcome Vicky Pryce, Economist, business consultant and former Joint Head of the UK’s Government Economic Service.
Chief Economic Adviser and a board member at the Centre for Economics and Business Research (CEBR).
Vicky Pryce is Chief Economic Adviser and a board member at the Centre for Economics and Business Research (CEBR). She was previously Senior Managing Director at FTI Consulting, Director General for Economics at the Department for Business, Innovation and Skills (BIS) and Joint Head of the UK Government Economic Service. Before that she was Partner at the accounting and consulting firm KPMG after senior economic positions in banking and the oil sector. She has held a number of academic posts and is a Fellow and Council member of the UK Academy for Social Sciences, a Fellow of the Society of Professional Economists and a Companion of the British Academy of Management. She is a member of the Advisory Board of the central banking think-tank OMFIF and of the Economic Advisory Group of the British Chambers of Commerce. She is also a Patron of the charities Pro-Bono Economics and Working Chance. Her books include: Greekonomics: The Euro crisis and Why Politicians Don’t Get It; It’s the Economy, Stupid Economics for Voters, with Ross and Urwin; and Redesigning Manufacturing, with Nielsen and Beverland. Her latest book, Women vs Capitalism, was published by Hurst in November 2019. She is co-founder of GoodCorporation, a company set up to advise on corporate social responsibility and is a Freeman and Liveryman of the City of London.