Ministers must decide priorities and make uncomfortable trade-offs in approach to global economy, urges IPPR
1 May 2025 01:13 PM
The government should rethink its global economic priorities and be prepared for uncomfortable trade-offs as it navigates a new era of geopolitics, says a report from the IPPR think tank
- Government cannot swerve making choices in an increasingly unstable and uncertain world, to meet its key objectives
- That means being more pragmatic about trade deals with countries that don’t share all our values, report argues
- Ministers should be more flexible in observing international economic laws
- Deeper integration with key trading partners such as the EU may be the right call
As the world faces growing competition, conflict and uncertainty – not least the tariff disarray that has come with the second Trump presidency – the UK will need to make tough choices on international economic policy, the report argues.
The government “cannot swerve making choices on the basis that there are straightforward ‘win-wins’ through which all objectives can be achieved simultaneously”, it says. Nor should it put all the principles it might wish to adhere to ahead of the need for pragmatic compromises that will deliver on some of the UK’s key objectives.
Key examples include the government’s approach to upholding current international economic law including WTO rules, where the UK “risks becoming hamstrung by an overly absolutist approach”; and its approach to deeper economic integration with key trading partners such as the EU. It says the latter may be the right call if there is strong public backing for the practical policy changes this would entail.
Across five major trade-offs, says the report, the government must sometimes be prepared to:
- Put building secure supply chains before economic efficiency, to ensure greater UK resilience to economic shocks, especially in critical sectors such as energy, defence, food, communications, and healthcare and pharmaceuticals. That means sourcing more such goods from allies and neighbours, even if their prices are higher.
- Be blunter about the case for greater economic integration with trade partners, such as the EU, to support growth even if this means harmonising regulations. The UK would be justified in doing so where there is a “clear public consensus” behind the policy changes needed, but should also clearly set out “red lines” on issues that are most sensitive to the public.
- Take a more pragmatic approach to international economic law – accepting that other countries are now routinely “cherry-picking” which rules to observe and which to flout, and that the World Trade Organisation is not functioning effectively. Sticking more closely than others to the letter of the rules could leave the government struggling to make progress on its industrial strategy, drive for economic resilience and other objectives. “The UK risks being left behind if it is overly constrained by a legalistic approach,” the report says.
- Be more open to engaging in economic negotiations with countries with differing values. The UK will need to work with those who have differing viewpoints, including on issues such as human rights, and opt to “show, not tell” its own values if it wants to deepen its economic and strategic diplomacy. Only working with those with similar values will hamper the UK's negotiating strategy in an era of tense and unstable geopolitics.
- Be willing to prioritise net zero and better relations with the global south, even if this means the playing field is not perfectly even for UK businesses. This means the UK should exempt some lower-income countries from the strictest environmental rules for imports. Failing to do so could undermine the broad global consensus that’s vital to tackling climate change.
To equip the government with the necessary tools and information to manage these international economic policy challenges in a consistent and strategic way, the report calls for two further actions:
- Set up a new mechanism within government to assess and weigh up trade-offs as they emerge. This could be done through a sub-committee of the National Security Council, IPPR suggests.
- Set up a “sufficiently staffed secretariat” to provide the high-quality data and analysis the committee would need when considering the right balance between trade-offs.
Marley Morris, IPPR associate director for trade, said:
“In a chaotic and unpredictable global context, the government has played a smart tactical game so far, forging an unlikely partnership with US president Donald Trump while also seeking closer ties with Europe and engaging more with China.
“But now it’s time to move beyond tactics to strategy. With hard trade-offs ahead, the government must make some tough choices to navigate the global economy and take the public with it.
“This means recognising that the pandemic and Trump’s trade wars have exposed how vulnerable we are to changes in the global economy. We must place far more emphasis on building supply chains that are resilient to economic shocks, geopolitical tensions, and natural disaster.
“At the same time, in a world of instability and disruption – with countries riding roughshod over international trade law – the government will need to be pragmatic in pursuing new economic partnerships.”
Laura Chappell, IPPR associate director for international policy, said:
“This is a profoundly difficult time in international economic policy – and is very different to the last time Labour was in power.
“Many things that the government cares about are in jeopardy – from UK growth and jobs to the multilateral institutions and alliances which enable us to work with other countries on joint problems.
“Ministers should try to resolve as many of these problems as possible. But it must also confront the fact that it can’t have it all. This isn’t a world stuffed with win-wins. Right now the government needs a clear sense of its priorities, and a mechanism which allows it to choose consistently between them as each new unexpected problem emerges.”
Marley Morris and Laura Chappell, the report’s authors, are available for interview.
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NOTES TO EDITORS
- The IPPR paper, Navigating trade-offs in the global economy: A framework for a ‘world between orders’ by Marley Morris and Laura Chappell, is available for download at: http://www.ippr.org/articles/navigating-trade-offs-in-the-global-economy
- IPPR (the Institute for Public Policy Research) is an independent charity working towards a fairer, greener, and more prosperous society. We are researchers, communicators, and policy experts creating tangible progressive change, and turning bold ideas into common sense realities. Working across the UK, IPPR, IPPR North, and IPPR Scotland are deeply connected to the people of our nations and regions, and the issues our communities face. We have helped shape national conversations and progressive policy change for more than 30 years. From making the early case for the minimum wage and tackling regional inequality, to proposing a windfall tax on energy companies, IPPR’s research and policy work has put forward practical solutions for the crises facing society. www.ippr.org