2016 will be remembered as the year of unpredicted electoral results and the rise of populism. Some attribute this to the ongoing effects of the 2008 financial crisis, but it could be argued that the impact of globalisation is the real culprit.
A quarter of a century ago, it was Marks and Spencer's proud boast that it sourced 90 per cent of its clothing from the UK. As a young equity analyst, I visited many small textile companies in the North of England and in Northern Ireland that relied almost entirely on M&S for sales. Today it is the other way around - 90 per cent of M&S' clothing is sourced from overseas. The company was forced to abandon its principles as it struggled to compete with its High Street competitors as they began to source offshore and passed on some of the benefits to their customers through lower pricing. The customers responded by buying more clothing. Retailers then moved from two seasons (Spring/Summer and Autumn/Winter) to eight seasons for womenswear and the concept of buying an item of clothing and wearing it for a few weeks before discarding it became the norm for younger consumers.
The world has changed for ever
Clothing retail illustrates why voters are questioning globalism
Now the retail sector faces new challenges as a huge chunk of sales have moved online. For companies like M&S, the cost of having massive stores has dragged it down, together with an inability to keep up with fashion trends. The world has changed for ever for the sector and it is a prime example of why voters are beginning to question whether globalisation was such a good thing after all. On the one hand they can buy a T-shirt for a couple of pounds at Primark or Matalan, but at the same time, thousands and thousands of manufacturing jobs have moved overseas, leaving the UK economy heavily dependent on services.
It is not just the textiles sector that has been affected of course. In general, heavy-end manufacturing has moved East. The one benefit is that we have exported pollution to China, but the overall impact on our economy has been detrimental. Our reliance on imports means that inflationary pressures are now building in our economy following the collapse of Sterling after Brexit. Yes, our manufacturers have received a major currency benefit, but many of their raw materials are purchased in US dollars and that needs to be taken into account. The government's response to all of this must be to draw up a new industrial strategy.