- 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
Launching a major new report today, the Chair of the
Commons Business and Trade Committee warns 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 firms
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”.
Rt Hon , Chair of the Committee
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.
