What to Expect from Burnham’s Trade Policy

Continuity, contradiction or competition?

The new Prime Minister has moved quickly to define the economic mission of his government. Industrial renewal, economic sovereignty and national resilience sit at the heart, reflecting his belief that UK deindustrialisation has driven regional decline, weakened national productivity, and stagnated growth.

Recent global events have only reinforced his views. The UK’s critical supply chains have become increasingly fragile and the global trading system remains volatile. Rebuilding domestic strategic capability and reducing exposure to external shocks are now a priority.

What is less clear is how this vision interacts with UK trade policy. Does Burnham see trade as a key driver of growth, investment and competitiveness, like his predecessor? Or does the clear shift in political emphasis signal otherwise? 

The new PM’s trade vision matters. As a small island nation, the UK is deeply connected to international markets. It is our global connectivity that forms the backbone of our economic resilience and national security. Trade accounts for around 65% of UK GDP. 30% of UK jobs are associated with British exports. UK import dependency for ‘critical goods’ ranges from anywhere between 40-90+%. 

The erosion of the UK’s trade strategy in place for a domestic-first agenda could put this all at jeopardy - inadvertently weakening the PM’s overarching economic objectives.

And while much of Burnham’s rhetoric borrows from the EU’s concept of ‘open strategic autonomy’ - strengthening domestic industrial capacity while intervening more actively where economic security is at stake - the UK is neither the economic or political heavyweight of the EU. Burnham cannot afford to drive an industrial strategy that prioritises self-reliance and greater trade defence, over international connectivity, investment and economic resilience. 

The real test therefore becomes whether the Prime Minister can ground his ideology within the geopolitical realities in which the UK is positioned. 

Five early indicators of Burnham’s trade policy

Although the PM has so far said relatively little about his trade agenda, five themes have emerged.

1. Public procurement should back British industry

Burnham's commitment to use public procurement to "back British industry" is a clear indication of his approach to industrial renewal, state intervention and trade policy. 

Earlier this month, the First Secretary of State announced that an overhaul of the system will centre around ‘social value’. In stripping down the rules, the renewed focus is to drive jobs, skills and investment, helping to improve productivity and long-term economic growth.

The challenge is how the policy detail of ‘back British’ interacts with the UK’s international obligations, including via the WTO and our Free Trade Agreements.

Under the WTO Government Procurement Agreement, the UK has an obligation not to discriminate against foreign suppliers solely on the basis of nationality. As do many of the UK FTAs that provide market access and national treatment so foreign suppliers can bid fairly for UK projects. All this means there could be legitimate legal challenges to Burnham’s planned reforms, depending on how they are designed and the risk he is willing to take. 

There is also the risk of retaliation by our trading partners where the UK currently competes well for international public contracts. The PM should not inadvertently cut the UK off from the international market by adopting a protectionist approach at home. It would, undoubtedly, undermine the growth agenda. Similarly, preference for ‘backing British’ may reduce competition and ultimately increase costs for taxpayers. It is clear that is not the policy intent. 

There remains underlying tensions to Burnham’s public procurement position. The ‘trade offs’ needs to be ironed out if the reforms are set to become one of the defining pillars of his economic programme. 

2. Rebuilding sovereign industrial capability

In his June speech in Manchester, Burnham identified steel, defence, energy, food and farming as five sectors of strategic importance. He said his government will take better action to safeguard domestic capability and strengthen security of supply. 

In principle, this approach does not necessarily interfere with an open trade agenda. Industrial powerhouses such as Germany, Japan and South Korea have all pursued active industrial policies anchored in international competitiveness and export growth. 

But that is a far cry from the UK’s insular, fragmented and siloed approach to industrial policymaking. And there is a legitimate question over whether the new Prime Minister’s approach will repeat some of the mistakes of his predecessors. 

Take Starmer’s approach to steel. To the detriment of millions of downstream users, the March 2025 Steel Strategy introduced new trade measures that inadvertently restricted imports of products that the UK cannot produce domestically. The result: they undermined the stated objective of stabilising the domestic sector by failing to recognise the complexity of the steel value chain. See our analysis on the Steel Strategy here.

Industrial renewal needs to be underpinned with a realistic understanding of what economic sovereignty means in practice, and better balance the trade offs between on and offshore supply chains. The newly formed Department for Business, Innovation, Science and Trade (BIST) helps to bridge together relevant economics teams for healthy debate on this. 

What we must hope for is the prioritisation of increasing domestic capability where the UK has clear competitive strengths, with an accompanying and credible export strategy that enables the domestic market to invest and grow overseas. Without doing so, Burnham risks undermining the competitiveness his industrial strategy should create.

3. Regional industrial clusters

Burnham's "Manchesterism" philosophy is built around geographically concentrated clusters in the UK’s growth-driving sectors.

It’s not necessarily a new concept - think Silicon Valley or the Oxford-Cambridge life sciences corridor, but given Burnham’s last gig as Mayor of Manchester, he has been keen to anchor his economic model close to his own regional success.

And to give credit to the former Mayor, Greater Manchester has become a regional powerhouse - centred around an active industrial base of advanced manufacturing and creative industries, innovation-led growth, and local control over investment. See here for our involvement in Greater Manchester’s Good Growth Fund, which the PM now wants to roll out more widely across the country.

His vision is for every nation and region of the UK to have its own industrial expertise, strengthening the likes of the West Midlands auto industry, North East offshore wind capability and South West critical minerals and defence expertise.

By developing regional industrial clusters, the PM believes the UK can boost productivity, create more highly-skilled jobs, and strengthen international competitiveness.

However, a regional approach will only succeed if the PM makes some difficult decisions. He will need to be much more selective about which current regional centres of excellence will secure the incentives, resources and investment to accelerate growth. That means picking the winners and consolidating the losers. 

And as above, a regional growth strategy will only succeed if it is tied to an export strategy that meaningfully supports and incentivises local businesses to forge international ties, attract foreign investment and boost UK exports. And when there have been such significant cuts to the UK’s export support services and wider diplomatic network, it looks unlikely that the UK has capacity to deliver. 

All eyes on what is promising to be a painful Budget and the highly anticipated ten-year plan.

4. Greater state direction of strategic industries

The Prime Minister has consistently advocated for stronger public involvement over essential sectors such as energy, transport, water and housing. While primarily a domestic economic proposition, his approach is also likely to have important implications for the UK’s trade policy, investment and international competitiveness.

Burnham’s strategy for greater public control will see a shift in power to regional centres - a shift that in his eyes will improve performance and make life more affordable. Mayors will have the power to direct investment, curb costs and build industrial capability. But in doing so, will he be able to contain the level of intervention, and what does that look like? 

This is where international comparators are interesting. There is the targeted and proportionate approach of Taiwan, whose intervention has created a world-leading semiconductor industry of which the global economy is dependent on. Yet intervention has been confined to coordination, not state control. Germany and South Korea have also intervened in key industries in a targeted manner, correcting market failures and driving productivity to create export-led growth. Again, directive without full state ownership.

And then there is China, whose unrivalled level of intervention has transformed its industrial base but the influence of state-owned enterprises is often associated with accusations of market distortions, unfair competition, and inconsistency with the rules-based trading system. The UK’s industrial base has already felt the impact of China shock 2.0. 

The contrast should act as a warning for Burnham. The UK must uphold its reputation for being a market oriented, pro-competition economy. But without constraint, the PM runs the risk of creating a precedent for state intervention that generates political pressure to use those powers more routinely. If the Government increasingly turns to local content requirements, subsidies or tougher regulations to protect domestic industries, tensions with the UK's trade commitments and wider economic interests will grow.

The PM should only ever intervene in the market where there is a necessity to correct failings and where appropriate action drives productivity, resilience and competitiveness across entire value chains. The overall objective is to help industries thrive, not survive. 

5. Closer cooperation with Europe

Burnham is a staunch supporter of closer relationships with our European partners. While there is still a lack of detail on his immediate priorities in this space, the PM has been forced to distance himself from the Brexit debate after comments made last year which made clear he wants to see the UK rejoin the bloc in his lifetime. 

This raises a question on whether he intends to pursue a closer economic relationship with Europe than his predecessor, and how that interacts with his emphasis on economic sovereignty and national resilience.

The upcoming Trade and Cooperation Agreement review (TBC Autumn), provides the first major opportunity for the Prime Minister to demonstrate how his Government intends to shape what closer UK-EU integration looks like. 

Burnham will be an advocate for removing unnecessary barriers to UK-EU trade, and would likely support greater participation in European industrial, research and innovation programmes. The exclusion of the UK from the EU’s ‘Made in Europe’ agenda will remain a sticking point, even as Burnham pursues his own British industrial philosophy.

The appointment of Hamish Falconer as the new Europe Minister, in place of Nick Thomas-Symonds, does in effect reset a lot of the conversation to date, presenting both risk and opportunity for the government’s agenda. The minister has so far said he wants to speed up the deepening of ties while remaining cognisant of the technicalities surrounding the UK’s involvement in the European agenda writ large. 

That creates a headache for policymakers. Their focus is to continue to define what shape and form ‘make Brexit work’ takes, and where Burnham ‘draws the line’ on balancing deeper integration with the domestic economic agenda. 

Continuity or change?

Burnham has repeatedly stated that Labour was elected on its 2024 manifesto and that this remains the mandate his Government intends to deliver. In that sense, there is every reason to expect continuity across many areas of trade policy, including closer cooperation with Europe, targeted free trade agreements and support for the rules-based trading system. 

But the political emphasis does appear to show potential contradictions to that approach. 

The shift in narrative towards reindustrialisation, economic sovereignty and national resilience could reasonably threaten the UK’s free trade agenda, our standing in the world, and most importantly our economic security - not something a mid-sized power with a productivity and slow (non-existent) growth problem can afford.   

Without caution, state intervention could accelerate protectionism, economic sovereignty may fuel isolationism, and ‘back British’ risks legal challenge. 

The biggest test is how the PM’s economic agenda actually translates to government policy. That probably means a dial-down in rhetoric to preserve trade openness, attract foreign investment, and safeguard security of supply. But will his ideology get the better of him?

At Bradshaw Advisory, we’ve already given the Prime Minister a range of recommendations he should drive forward to strengthen UK trade. See here. Over the coming months, we’ll be tracking the PM’s evolving policies and the newly formed Department for Business, Innovation, Science and Trade’s role, to better determine how trade fits into Burnham’s economic agenda.