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Committee calls for Economic Security Bill to enshrine the approach set out in new Report in law, with the appointment of a dedicated Economic Security Minister.

• Read the new report (HTML)
• Read the new report (PDF)
• Inquiry: UK Economic Security 
• Business and Trade Sub-Committee on Economic Security, Arms and Export Controls

In a major new report launched yesterday, the Chair of the Commons Business and Trade Committee warned that the UK’s economic security regime is “not fit for the future” and it risks becoming the “weak point in the West’s emerging system of economic security” unless it readies the nation for a new era of economic warfare. 

In the absence of any “consolidated assessment of the threats to UK economic security” from Government, the Committee is publishing its own baseline assessment of the UK's economic security after a year in which major UK were paralysed by cyber attacks and China threatened to interrupt supplies of crucial computer chips and rare earths. The report sets out 10 key threats facing the UK and warns of scenarios in which the UK experiences a combined attack characterised as “everything, everywhere all at once.” 

In August, a cyber-attack froze Jaguar Land Rover operations with an economic impact that registered in GDP and required over £1.5 billion of state financial guarantees to safeguard 120,000 automotive supply chain jobs. But the UK’s case-by-case approach leaves industry uncertain about where lines of responsibility lie, raises concerns about “moral hazard” and leaves industry unclear about the priorities for long term investment in building a more resilient economy. Businesses told the Committee that there is currently no space or institution where the public and private sectors can plan the response to the threats the UK now confronts. 

The report’s comparisons of UK economic defences with the United States, the European Union, and Japan reveal that Britain is now lagging behind its allies. At the same time, the UK is second in Europe for inward flows of foreign investment. Foreign acquisitions of UK companies increased almost 400 per cent between 2015 and 2022, including approaches for companies in politically sensitive sectors such as semiconductors, cybersecurity and defence, and almost 50 firms of British origin that would qualify for the FTSE 100 Index are now foreign-owned. 

The BBC recently reported China has financed tens of billions of pounds' worth of investment in UK businesses and projects this century, “some of which gave it access to military-grade technology”.

Chair comment

Rt Hon Liam Byrne, Chair of the Committee yesterday said:

“Britain is now hugely exposed to the risks of economic warfare and bluntly, our current defences are not fit for the future. As a mid-sized, open economy, we are uniquely exposed - ever more reliant on foreign capital, foreign technology and foreign ownership of critical assets. Yet the risks we face are set to get worse in the years to come as foreign investment grows, AI lowers the cost of cyber-aggression and hostile actors become more brazen.

“After World War 1, we had to learn how to wield economic power to deter our enemies and keep the country safe in time of war, building what became known as ‘fourth fighting service.’ But those disciplines have been lost and must now be rebuilt.

“The Prime Minister is clear that national security rests on economic security but in reality while our allies have modernised, Britain is falling behind. 

“Just as we modernised counter-terrorism doctrine after 7/7, so we now need a comprehensive new doctrine to guide our economic security.  We argue six principles sit at the heart of that new approach; detect, deter, diversify, develop, defend and dovetail — backed by an Office for Economic Security, a dedicated minister and statutory backing to provide long term clarity and certainty for industry. In an era of weaponised interdependence, economic security must stand alongside defence, diplomacy and development as the fourth pillar of Britain’s national strength.” 

The Committee calls on Government to enshrine in law a new doctrine of economic security, tying the public and private sectors and based on ‘the 6-Ds’: 

• diagnose the threats to Britain’s economy, and agree a shared understanding across government and industry;  
• develop sovereign capabilities; 
• diversify supply chains;  
• defend critical national infrastructure;  
• strengthen deterrence against coercion;  
• dovetail the efforts of the public and private sectors and of British efforts with those of its closest allies 

The Committee proposes:

• an Economic Security Bill to enshrine the approach set out in this Report in law; 
• the appointment of a dedicated Economic Security Minister; 
•  the creation of an Office for Economic Security to coordinate policy and intelligence much as the UK established in the 1920s; 
•  the re-establishment of the Economic Security Sub-Committee of the National Security Council;  
• reinstatement of the Secretary of State for Business and Trade as a full NSC member, and;  
• an overhaul of information-sharing with Parliament to ensure accountability. 

Further information

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