By Jun Du, professor of Economics at Aston University and member of the BCC’s Economic Advisory Council (EAC)
The British Chambers of Commerce’s Competitiveness Report 2025[1] provides a clear-sighted assessment of the UK’s strengths and challenges and sets out practical ways to enhance long-term growth. Building on that discussion, I want to highlight one critical but often overlooked dimension of competitiveness: supply chains.
When we talk about competitiveness, we usually reach for familiar levers – productivity, innovation, skills, and investment. All are vital. But supply chains are where these levers come together and are tested in practice. They determine whether breakthroughs in research translate into production at scale, whether firms can reach markets reliably, and whether an economy can build resilience in the face of global shocks.
Supply chains as national competence
Too often, UK debates frame supply chains as logistical systems to be safeguarded against risk. That view is too narrow. In today’s connected global economy, supply chains are a measure of national competence – the breadth and depth of supplier networks, the integration of services alongside goods, and the adaptive capacity to reconfigure when disruptions strike. Competence here is not just about efficiency but about positioning: how a country embeds itself in global value chains, secures upgrading opportunities, and sustains long-term resilience.
Where weaknesses show
The past five years have revealed structural weaknesses in the UK’s supply chain positioning. COVID exposed vulnerabilities in PPE and medical supplies. Brexit weakened the UK’s role in previously seamless EU supply chains, with declines in intermediate inputs and agrifood trade[2]. The collapse of Britishvolt underlined the absence of a coherent EV battery ecosystem[3], where UK R&D leadership was not matched by upstream materials or downstream manufacturing capacity. And the pharmaceutical sector continues to depend heavily on concentrated global sources of active ingredients and testing materials, despite the UK’s world-class science base.
These might seem isolated shocks. But taken together, they point to a deeper challenge: the absence of deliberate foresight and strategic positioning, leaving the UK slow to adapt to rapidly evolving global market shifts.
What resilience really means
“Resilience” now appears in every strategy document, from industrial policy to the UK’s trade strategy. Yet its meaning is often vague, too easily reduced to stockpiling, reshoring, or long lists of risks. These measures may ease short-term vulnerabilities but do little to build long-term strength.
The recent OECD’s Supply Chain Resilience Review (2025) shows that aggressive reshoring could reduce global trade by almost a fifth and cut global GDP by over 5 %, and still not guarantee greater resilience[4]. Instead, the review argues, resilience comes from adaptive capacity: the ability of firms and economies to reconfigure production, redeploy capabilities, and align across borders when disruptions strike.
This is precisely where the UK lags. We have world-class R&D in areas like electric vehicles, but limited capacity to scale production or secure critical minerals. Britishvolt’s fall underlined just how thin our adaptive capacity remains in a vital sector.
Services in the supply chain equation
Much of the policy debate still tilts towards physical production. Yet in today’s economy, services are inseparable from supply chains: they are intermediate inputs such as design, testing, and logistics; they are enablers of innovation through data, finance, and digital platforms; and they are high-value outputs in their own right.
For a service-oriented economy like the UK, integrating services systematically into supply chain strategy is not optional – it is a core competitiveness issue. The reality, however, is that services and manufacturing are still too often treated as separate spheres, sometimes even in competition.
The aerospace sector shows what integration looks like in practice: advanced engineering consultancies, digital design firms, and testing services are embedded at every stage of production, making the supply chain not only more innovative but also more resilient. By contrast, in other sectors this integration remains underdeveloped. What is needed is genuine systems thinking: a framework that recognises services and manufacturing as interdependent and designs policies to strengthen their integration across value chains.
Towards a fresh approach
The UK’s Critical Imports and Supply Chains Strategy (2024) recognised some of these challenges, but its delivery has been narrow and largely government-centric[5]. What is needed is a more ambitious approach that:
- treats supply chains as strategic infrastructure, as essential as energy or digital networks;
- develops supply chain intelligence as a public good, giving firms – especially SMEs – open access to insights on dependencies, standards, and risks;
- supports capability-building across supplier networks, lifting mid-tier firms into higher-value segments of global value chains; and
- coordinates policy across trade, industrial strategy, and innovation, rather than treating them in silos.
Why this matters
Competitiveness is about more than firm performance or sectoral strengths in isolation. It is about the systems that connect them and supply chains are the most critical of those systems. For the UK, that means moving beyond a narrow view of logistics or short-term fixes. Supply chain competence rests on three pillars: the breadth and depth of supplier networks, the systematic integration of services with manufacturing, and the adaptive capacity to reconfigure when shocks strike.
The UK has world-class science, dynamic firms, and globally competitive services, but unless these assets are deliberately connected into stronger value chains, they risk remaining underexploited. Too often, innovation gets stranded in the lab, SMEs remain stuck in low-value tiers, and services are treated as an adjunct rather than a driver of competitiveness.
If the UK is to deliver on the vision set out in the Competitiveness Report 2025, supply chains must move from background risk to strategic priority. They are where resilience is built, where value is captured, and where the battle for competitiveness will ultimately be won or lost.
Further reading
- Jun Du’s Substack https://jundu1.substack.com/
- Fit for 2030: Ideas for a globally competitive UK https://www.britishchambers.org.uk/news/2025/10/budget-must-give-uk-competitive-edge/
- BCC Insights Unit publications https://www.britishchambers.org.uk/insights-unit/publications-and-commentary/
[1] https://www.britishchambers.org.uk/news/2025/10/budget-must-give-uk-competitive-edge/
[2] https://www.aston.ac.uk/research/bss/research-centres/business-prosperity/unbound
[3] https://publications.parliament.uk/pa/cm5804/cmselect/cmbeis/196/report.html
[4] https://www.oecd.org/en/publications/2025/06/oecd-supply-chain-resilience-review_9930d256.html
[5] https://www.gov.uk/government/publications/uk-critical-imports-and-supply-chains-strategy