Look East for new optimism

This article by Carl Richardson was first published in the London Evening Standard on 30th August, 2025. In an unstable world British business should look East to Japan | The Standard

As we debate how best to boost economic growth into the UK, spare a thought for the Japanese who have been grappling with similar challenges for much, much longer.

For most of the last 30 years, Japan’s economy has been characterised by low growth and deflationary pressures. Despite the best efforts of successive governments, the economy has remained stubbornly stalled.

These “lost decades” contrast starkly with the “economic miracle” of the 1950s and 1960s that saw Japan recover from the devastation of the Second World War and lead the world in key manufacturing sectors, like cars and electronics.

But there is cause for some optimism beyond the economic gloom in both countries, not least because of the blossoming trading relationship between the UK and Japan.

Since 2000, bilateral trade has continued to grow but has changed significantly in character. For the UK, what was a goods-based deficit has switched to a services-driven surplus and, while Japan remains a key source of high-value manufactured goods to this country, the current relationship is defined by high growth in UK services, especially in financial, professional, and business-related activity.

This partnership has been given new momentum by a series of agreements between the UK and Japan driven by a range of issues that are changing the roles that both, as significant, if second-tier powers, are playing in a more unstable economic and political world.

Japan wants boost domestic growth by encouraging direct foreign investment and is keen to reduce its economic reliance on China. Post-Brexit Britain has sought new relationships in the Pacific region, a tilt set out by Boris Johnson when he was PM and maintained by his successors.

The Comprehensive Economic Partnership agreement between the two countries in 2020 helped shape the trading relationship outside the European Union and set the path for the UK to join the Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP) confirmed by Sir Keir Starmer last year.

The CPTPP boosts trade among economies representing nearly 15% of global GDP and, as an existing member of the CPTPP,  Japan was a key advocate of the admission of the UK, the first new entrant to the 12-member block since its inception.

Over and above these closer economic ties with Japan, the two countries have also recently demonstrated closer military links too, perhaps most visibly with the trilateral Global Combat Air Program (GCAP) with the Italians to develop a next-generation fighter jet by 2035.

Eighty years after the dropping of nuclear bombs on Hiroshima and Nagasaki, the UK's Carrier Strike Group 25, led by HMS Prince of Wales, has recently visited Japan to strengthen the UK-Japan strategic partnership and deepen defence cooperation

The deployment was also timed to coincide with the 2025 World Expo, taking place in Osaka, Japan’s third biggest city renowned for its world-class food scene and vibrant night life.

I was fortunate to attend the Expo this summer, with the theme of the event being ‘Designing a Future Society for Our Lives’, aimed at helping to demonstrate what the world might look like if it can meet the United Nation’s 17 “Sustainable Development Goals’”.

While the international event has attracted relatively little media coverage in the UK (even though its roots were planted in 1851 at the Great Exhibition in London) its Japanese hosts have certainly embraced it. The first four months have seen total visitor numbers exceed 15 million and it is on track to surpass the 24 million guests who visited the last Expo in Dubai four years ago.

Perhaps more surprisingly, it is well outpacing the 16 million annual visitors that attend the Universal Studios Japan, the country’s most popular theme park also located in Osaka.

The popularity of the Expo in Osaka is clear evidence of Japan’s ability to have both a relentless focus on ‘the new’ and ‘the future’, while also retaining a remarkably strong sense of its own past and unique culture, be that the Geisha in Kyoto or Sumo wrestlers in Tokyo.

Personally, I find Expo, and the opportunity it offers to get a snapshot of ideas that different countries are generating and presenting to the world, to be a great way to stimulate ideas.  This was certainly the case when I recently had the opportunity to visit Osaka.

While our own business doesn’t directly invest in Japan at present, we do hold investments in 27 countries, and have a number of interests in other parts of the Indo-Pacific, including Singapore and Australia. We subscribe to the fundamental belief that you have to ‘put eyes’ on opportunities and explore them fully in order to make the best investment decisions, and so spending some time in Japan and exploring the Expo fitted that perfectly.

There will be much focus on the UK’s relationship with the US, given the forthcoming state visit by President Trump. This will continue to be critical. But the global turbulence today requires the UK to seek to build and grown new and existing relationships to boost our economy and security.

The relationship with Japan opens up new opportunities within what is – despite the economic woes of the last 30 years - the world’s fourth largest economy. Enterprising British businesses should look East and I hope we can join them too.