Source · Select Committees · Business and Trade Committee
Recommendation 20
20
Accepted
Approach Economic Prosperity Deal as strategic economic and foreign policy for Western leadership.
Recommendation
It is vital that the UK approaches the EPD not merely as a trade arrangement, but as a component of an economic and foreign policy strategy focused on ensuring Western leadership in the face of global competition, particularly from China. This strategy should be shaped by three frameworks: a. the priorities for growing the eight strategic sectors identified in the Industrial Strategy and Trade strategy; b. the Defence Industrial Strategy, which as we have recommended must contain a clear definition of the sovereign capabilities the UK seeks to on-shore, the capabilities we are content to trade for; and c. a clear-eyed assessment of risks to (i) critical supply chains, (ii) critical minerals, (iii) investment and (iv) export security as part of a wider economic security strategy. (Recommendation, Paragraph 106)
Government Response Summary
The government accepts the need for a strategic economic and foreign policy approach to the EPD, stating it will integrate modern trade tools, strengthen defences against unfair practices, and implement its Industrial and Trade Strategies, including launching a Supply Chain Centre to map vulnerabilities and build resilience.
Government Response
Accepted
HM Government
Accepted
The UK is dealing with the realities of a changed world, no longer a planet of deepening integration, but a newly fractured globe defined by rival power centres and complex interdependencies. To ensure future growth, we must recognise this while continuing to work with our partners to maximise opportunities and minimise risks. This Government will continue to take a consistent, long term, and strategic approach to managing the UK’s relations with China, rooted in UK and global interests. It is also important to recognise there will be opportunities as well as challenges resulting from deepening the UK’s most important trading relationships as the global order continues to evolve. The UK’s approach of deploying modern trade tools, strengthening defences against unfair practices, reinforcing the multilateral system, and effective implementation of our Industrial and Trade Strategies aims to deliver a trade policy that works for businesses and communities across the UK within this ever-evolving context. Our approach is guided by pragmatic patriotism and a commitment to longstanding values such as stability and international law. Both the Industrial Strategy and the Trade Strategy are the foundations for our programme for growth through trade, including the UK-US EPD. As set out in the Trade Strategy, the partnership between the UK and the US is of global importance. Total trade between our countries was worth £331 billion in the 12 months to June 2025 (representing 18% of total UK trade)1, and we have £1.2 trillion invested in each other’s economies.2 The UK must prioritise access to markets which present the biggest growth opportunities for UK businesses, as well as a strategic approach to what we trade. Access to the US was identified as a priority for businesses in the 8 growth-driving sectors set out in the Industrial Strategy, all of which are globally interconnected, and our cutting-edge businesses rely on international trade, investment and cooperation. The interventions in both the Trade and Industrial Strategies are mutually reinforcing for the UK’s economic security. For example, the Trade Strategy is focused on how we can use international partnerships to support resilience, including import resilience, and launches an Economic Security Advisory Service, both of which will support resilience across the Industrial Strategy sectors. Likewise, the Industrial Strategy complements the Trade Strategy with a focus on domestic resilience levers such as improving access to finance to encourage businesses to build UK capability and diversify supply chains away from sources of vulnerability or concentration. These interventions must be delivered in a coordinated way and the analysis of our new supply chain centre will inform the delivery of both to ensure this. Our trade policy toolkit will be deployed in line with our pragmatic approach to trade–the ongoing EPD negotiations with the US demonstrates this Government’s commitment to using the right tool with the right partner at the right time to achieve tangible benefits for UK businesses, workers and consumers. In the case of economic security, this includes investment screening and export controls to ensure the UK and US focus on outcomes reflecting our shared economic security interests. On critical supply chains, the Supply Chain Centre (announced in the Industrial and Trade Strategies) will be launched to map critical inputs, analyse future demand trends and identify vulnerabilities. We will use this analysis to recommend actions to build resilience in critical supply chains, such as capability building, diversification, or strategic partnerships. This will be important for our work to secure supply chains under the EPD.