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Paul Johnston

Ambassador to Ireland

Part of UK in Sweden

27th January 2014

Reshoring: Good news for Europe

Last week, UK Prime Minister David Cameron was in Davos for the World Economic Forum, where he discussed his strategy for making Britain the ‘Reshore Nation’. He also outlined what Europe can do to reap the benefits of reshoring.

What is reshoring?

It’s generally considered to be the process where a company has moved business activity overseas (“offshore”) and then has subsequently returned that activity to its original country.

Offshoring decisions have typically been driven by the low costs of doing business in emerging markets. However the increasing erosion of that cost differential (manufacturing wages in China rose on average by 15% annually between 2005 and 2011), coupled with the additional risks and difficulties of doing business in some emerging markets and other overseas locations, has led businesses to reappraise their location decisions. Locating work in Asia is no longer the default option for many businesses and location decisions are becoming more complex and finely balanced.

Evidence from the UK’s Manufacturing Advisory Service (MAS) thus suggests a growing global trend towards reshoring, with significant potential benefits for the UK and Europe more widely, if we are able to take advantage of it.

The UK’s strong and stable economy, competitive corporate tax rates, good regulatory environment, strong legal framework and dynamic labour market mean that UK companies are increasingly looking to reshore manufacturing, textiles, software production and call centre work to the UK instead of outsourcing overseas.

This can also be a success story for other European countries. In cases like Sweden’s with similarly strong, indeed in some ways stronger fundamentals, there is scope for reshoring to play an important role more generally in helping Europe create jobs and growth.

In the UK, as part of the government’s response to the challenge and opportunity of reshoring, UK Trade & Investment (UKTI) and the Manufacturing Advisory Service (MAS) are joining forces to launch Reshore UK. The new joint service will identify reshoring opportunities in UK supply chains. UKTI will use its global networks to attract foreign companies to invest, and MAS (and partners) will help UK businesses to bring work back to the UK.

Reshoring is not a zero-sum game. Jobs will continue to be created in the emerging markets, not least as their domestic markets develop. This is about the UK, and Europe, embracing globalisation and being competitive in the global economy, which increases wealth for all.
A full transcript of the Prime Minister Cameron’s speech can be found here.

About Paul Johnston

Paul Johnston joined the UK Civil Service in 1990, working for the Ministry of Defence initially. He has served in Paris and New York and has also had a wide…

Paul Johnston joined the UK Civil Service in 1990, working for the Ministry of Defence initially.

He has served in Paris and New York and has also had a wide range of political and security roles in the Foreign and Commonwealth Office in London. Paul joined the Foreign and Commonwealth Office in 1993 as Desk Officer for Bosnia. As part of this role he was also Private Secretary to EU negotiator Lord Owen and his representative on Bosnia Contact Group.

His first foreign posting was to Paris in 1995-99 as Second Secretary Political. He was Private Secretary to the Ambassador and latterly part of the UK delegation to the Kosovo Rambouillet negotiations. Then he returned to London as Head of the Kosovo Policy Team, leading work on post-conflict policy in the EU, NATO, UN and G8.

Before his second overseas posting to New York in 2005, Paul held a variety of other EU policy and security appointments in London, such as Head of European Defence Section between 2000-01 and Head of Security Policy Department between 2002-04.

As Head of the Political Section in UKMIS New York, he advised on major policy issues for the UK on the Security Council and the UN World Summit, including the UK EU Presidency in 2005.

Paul returned to London in 2008 as Director, International Security for the FCO. He was responsible for policy on UN, NATO, European Security, arms control and disarmament, human rights and good governance.

Paul was British Ambassador to Sweden from August 2011 to August 2015 and then was Deputy Permanent Representative to NATO.

He was UK Ambassador to the EU for Political and Security affairs from 2017 to January 2020 and became Ambassador to Ireland in September 2020.