The topic was discussed on 29 October 2025 during a breakfast hosted by the Industry and Parliament Trust at the House of Commons. This discussion was chaired by Lord Holmes of Richmond, with guest speakers Professor Jun Du, Founding Director of the Centre for Business Prosperity at Aston Business School, and Chris Hayward from the City of London Corporation.

Myth 1: "We're deglobalising"

The narrative of deglobalisation dominates policy discourse, yet the data tells a different story. Global trade grew 12% last year, with goods trade increasing 3.3% and a further 2.7% recorded in Q1 2025. Rather than retreating, global value chains are reconfiguring in response to geopolitical tensions and technological shifts.

This distinction matters profoundly for policy design. If trade flows are reorganising along new axes, the opportunity lies in navigating change strategically rather than resisting it. Recent analysis of agricultural commodity markets demonstrates this pattern: when US soybean exports to China collapsed following trade tensions, Brazil rapidly captured the displaced market share permanently, a phenomenon economists term hysteresis. Manufacturing supply chains exhibit similar dynamics, with production networks diversifying whilst maintaining global integration.

Myth 2: "Everything's going regional"

The assumption that trade is becoming predominantly regional overlooks compelling evidence to the contrary. DHL's Global Connectedness Index reveals that approximately half of international trade flows occur between regions rather than within them. With all the backshoring, friendshoring and nearshoring that have happened in the past years, the inter-regional share of global trade is still rising.

This matters for UK trade strategy. The prevailing policy assumption often presents a binary choice: deepen regional integration with European neighbours or pursue global ambitions elsewhere. Yet successful strategies increasingly require strategic hybridity. Selective engagement across multiple spheres rather than wholesale commitment to single blocs.

For the UK specifically, progress in EU trade relations is welcome but structurally constrained by the Trade and Cooperation Agreement. Meanwhile, UK goods exports have stagnated for several years. Growth is emerging elsewhere: UK exports to BRICS nations, the Middle East and North Africa, and African markets are surging. These regions' demand for clean energy infrastructure, sustainable development expertise, and green finance aligns well with UK sectoral strengths.

Myth 3: "US-China decoupling is impossible"

The third myth—that deep economic interdependence makes US-China decoupling impossible—is being disproven in real time. Trade data shows significant reconfiguration of bilateral flows, particularly in strategic sectors. This creates both threats and opportunities for economies positioned between the two powers.

For nimble nations, fragmentation creates arbitrage opportunities. Rather than seeking the stability of a rules-based multilateral system that may not return soon, competitive advantage may lie in exploiting asymmetries between emerging blocs. This requires sophisticated understanding of regulatory divergence, supply chain vulnerabilities, and comparative capabilities across different market systems.

Building supply chain competence, not just connectivity

Discussion at the breakfast highlighted a critical distinction: the difference between supply chain connectivity and supply chain competence. Connectivity as the number and strength of trade relationships has dominated policy attention. Yet supply chain competence increasingly determines competitive outcomes: the breadth and depth of supplier networks, the integration of services alongside goods, and the adaptive capacity to reconfigure when disruptions strike.

This matters because competence is not just about efficiency but about strategic positioning. It is about how economies embed themselves in global value chains and sustain resilience. For the UK, this means developing capabilities across all three dimensions: building stronger supplier networks that can absorb shocks, fostering adaptive capacity to pivot when markets shift, and recognising that services and manufacturing are interdependent rather than separate spheres. Trade policy and industrial strategy should reflect this systems view, treating supply chains as strategic infrastructure rather than mere logistics.

What could be done next?

Addressing these realities requires fresh thinking across several dimensions. First, trade policy frameworks need strategic flexibility rather than rigid alignment with any single bloc. This means developing mechanisms for regulatory cooperation that preserve policy autonomy whilst reducing friction.

Second, competitiveness policy should focus on building tomorrow's capabilities rather than protecting yesterday's advantages. This includes supporting firms to develop the digital infrastructure, workforce skills, and supply chain coordination needed for contemporary trade. Evidence suggests capability gaps, rather than market access barriers, often constrain smaller firms' international growth.

Third, trade strategy should recognise services-manufacturing interdependence explicitly. Negotiations that separate goods and services miss how value is created in modern production networks. Finally, enhanced trade intelligence infrastructure – real-time  monitoring of supply chain shifts, better granularity on services trade, and systematic tracking of regulatory divergence, if affordable – would strengthen the UK's ability to navigate fragmenting global markets.

The breakfast discussion demonstrated significant appetite amongst parliamentarians and industry leaders for evidence-based challenge to conventional wisdom. As global trade reorganises, UK strategy must evolve beyond comfortable assumptions. The question isn't whether trade is reimagined. It's whether we have the imagination to trade.

Jun Du, Professor of Economics and Founding Director of the Centre for Business Prosperity, Aston Business School