Globalisation in Retreat: Are We Entering a New Economic Order?

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Joe Patey, Lead Economics Writer

For decades, globalisation was a major driving force of the modern economy. It led to lower costs through offshoring and outsourcing production to countries that had a comparative advantage, expanded markets by lowering tariffs, and connected the world at an unprecedented level. From the 1990s through the early 2010s, firms built sprawling supply chains, trade barriers fell, and consumers enjoyed cheaper goods and rapid innovation. But today, this era of hyper-globalisation appears to be shifting.

The warning signs first began after the 2008 financial crisis, which highlighted the problems of being too interconnected. Economic nationalism began to rise, with movements like Brexit and the US-China trade war signalling a growing backlash. But it wasn’t until the COVID-19 pandemic that the vulnerabilities of globalisation were truly exposed.

The pandemic triggered huge supply chain disruptions, with products like microchips and PPE becoming extremely scarce because of overreliance on a small number of foreign suppliers and the lack of domestic production capacity. In 2020, global trade volumes fell by 5.3%, marking the steepest drop since the 2008 financial crisis (WTO). This therefore, revealed the danger of the world relying on “just-in-time” methods of production as countries scrambled to secure domestic manufacturing capacity. All of a sudden, the ability to produce locally became a strategic imperative.

Recent geopolitical tensions have only accelerated the retreat. Russia’s invasion of Ukraine reshaped Europe’s energy policies almost overnight, while the US has moved to decouple from China in key industries such as semiconductors and clean tech. In response, we’re seeing the rise of “friendshoring”, where countries trade more within politically aligned blocs, alongside a greater emphasis on national security in economic decisions.

So, are we witnessing the end of globalisation? Not quite. What’s emerging isn’t deglobalisation, but a changing global order where resilience, geopolitics, and regional alliances play a far greater role than before.

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