Is the UK’s economic security regime fit-for-purpose? BTC launches new sub-Committee

• Inquiry: UK economic security
• Submit evidence
• Business and Trade Sub-Committee on Economic Security, Arms and Export Controls

The UK is increasingly exposed to threats across a spectrum of economic security interests from state and non-state actors. These include threats to supply chain resilience, inbound and outbound investments, economic crime, sanctions evasion, fraud and money laundering, and academic collaborations.

In July 2023, then Deputy Prime Minister Oliver Dowden described China as the "largest state-based threat" to Britain's economic security, after government intervened in eight attempted takeovers of UK firms by Chinese buyers in 2022 over national security fears. In January this year Sky news reported fears over the robustness of Britain's trade sanctions after HM Revenue and Customs admitted it had no central record of how many investigations it's carrying out into Russian sanctions. 

As geopolitical risk rises, so does UK vulnerability. While Government is due to produce significant new national security, industrial, infrastructure and trade strategies this year, it has announced no plans to publish an economic security strategy.  The National Security Council’s Economic Security sub-committee has been abolished. Though Invest 2035, the Government’s industrial strategy Green Paper, lists economic security and resilience as a key strategic objective, and DBT has responsibility for the UK’s economic security regime, the Committee recently learned that the Business Secretary has been removed as a permanent member of the National Security Council.  

So how does Government use and co-ordinate economic sanctions, investment and export controls and trade agreements as the tools available to it to enhance economic security? Are there critical gaps in the UK’s regime that Government must fill?  

Chair comment

Chair of the BTC Rt Hon Liam Byrne MP said:  

"We’re living in new times - and it's now crystal clear that our economic security is critical to our national safety and strength. 

"We need to create a space in Parliament where we ask the difficult questions to ministers.  Are they putting in place the safeguards, and making the right trade-offs, to ensure our open, free trading islands remain a bastion of strength in this new era.

"That is the task we've set for our new subcommittee.” 

Though Government says economic security is a key priority and a “core concern of the Growth Mission Board”, it’s not clear how it plans to adapt or take forward key elements inherited from the previous Government including the Atlantic Declaration, the Hiroshima Accord and Pillar 2 of the AUKUS defence pact. Meanwhile other international actors are thinking about economic security with increasing sophistication. The European Commission published a European Economic Security Strategy in June 2023, and the United States has also taken steps to strengthen aspects of its economic security regime including processes to screen and potentially restrict outbound investments.    

Evidence submission

The Committee is now inviting evidence on any or all of the following questions by April 4: 

       1. Economic security: 

• How should the UK Government define “economic security”, and what are the advantages and disadvantages of particular definitions? 
• Does the UK need a clear strategy for economic security, and what are the risks of not having one? 
• What are the main economic security threats, and what principles should underly the UK’s response to them? 
• Specifically, what are the challenges of new technologies, such as AI, for economic security, and how can the UK’s economic security be resilient in the face of technological change? 
• What can the UK learn from other international actors such as our allies in the United States, Europe and Japan, about how to develop an effective approach to economic security? 
• How can economic security be best integrated with the Government’s growth mission, industrial strategy and trade strategy. What trade-offs are required between security and efficiency? 

2. Opportunities to enhance economic security:  

• What are the most important gaps in the UK’s economic security regime? How should these be addressed? What is the right level of tolerance for risk? 
• What are the implications of managing these risks for public spending? Is HMG resourcing the management of these risks appropriately?  
• How should the Government work with business to safeguard the UK’s economic security? What is the cost to business of this approach? 
• How should the effectiveness and success of the UK’s economic security regime be measured?

3. Working across Government:  

• How should work across multiple Government departments and public bodies be co-ordinated to achieve economic security objectives? 
• What governance structures could be put in place to ensure that economic security informs Government decision-making? 
• What capabilities will the UK Government need to develop in order to be able to respond rapidly and effectively to economic security threats?
• What governance mechanisms and powers might be necessary to ensure that UK industry can respond effectively to national security threats - for example through defence production?

4. International partnerships:  

• How should the UK ensure that economic security factors into decisions around international partnerships, including trade agreements and security co-operation? 
• How can the UK most effectively work with international partners to deter and respond to economic security threats, including economic coercion?

Further information

• About Parliament: Select committees
• Visiting Parliament: Watch committees

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