In a world where economic and geopolitical uncertainty and volatility are becoming the norm, the only certainty seems to be their pervasive impact on the economy and society. We are living in an age defined by insecurity, a concept Rachel Reeves, the UK’s Shadow Chancellor of the Exchequer, aptly calls “securonomics” – the intricate intersection of economic, security, and foreign policy.

The magnitude of the shocks we face today is unprecedented. From the climate emergency to the emergence of disruptive new technologies, these shocks are arriving with increasing frequency and severity, leading to significant structural impacts on politics, society, and the global economy. Events that were once considered once-in-a-generation occurrences are now happening more regularly, forcing us to rethink our approach to resilience and adaptability.

Simon Chinn, Vice President, Research & Advisory Services, ULI Europe

At the recent ULI Spain annual conference in Madrid, Manuel Muñiz, Provost of IE University and Dean of IE School of Politics, Economics & Global Affairs, highlighted three critical issues underpinning our fractured global outlook.

First, there is the issue of growing volatility. The rise in geopolitical tensions worldwide has profound economic implications, causing disruptions to trade, commerce, and supply chains. These disruptions are not mere inconveniences but are reshaping the global economic landscape, making stability a rare commodity.

Second, we are witnessing the fragmentation of both the economy and politics. According to analysis by the International Monetary Fund (IMF), new trade restrictions have increased sharply —more than tripling since 2019—while financial sanctions have also expanded. This surge in trade hostilities is creating a more challenging business environment for companies to navigate globally. The trend towards regionalisation of trade barriers further complicates the situation, exerting pressure on companies to enhance their foresight and scenario planning capabilities. Businesses must now hedge against a variety of risks while balancing pressures on prices and efficiency.

Source: IMF ‘Geopolitics and its Impact on Global Trade and the Dollar’, May 2024

The third issue is sustainability. The private sector plays a crucial role in this domain, bringing together diverse stakeholders to address environmental, social, and governance (ESG) factors. ESG is no longer a peripheral concern but a core value driver. Companies are increasingly required to deploy capital that complies with ever-stricter ESG standards, which presents both challenges and opportunities.

In a keynote on the macroeconomic environment, Simon Durkin, Global Head of Real Estate Research and Strategy for Equity Private Markets at BlackRock emphasised the need for companies to build resilience against uncertainty into their portfolios. The complexity of decision-making processes is increasing as businesses strive to adapt to an unpredictable environment.

Reflecting on the discussions and insights from leading experts at the conference, it becomes clear that a fundamental mindset shift is required. To adapt and thrive in an ever-changing world, companies and policymakers must embrace securonomics. This approach entails understanding the intertwined nature of economic, security, and foreign policy challenges and developing strategies that foster resilience and sustainability.

The era of securonomics demands a proactive and adaptive mindset. By acknowledging and preparing for the multifaceted challenges we face, we can navigate the turbulence of our times and emerge stronger, more resilient, and better equipped to handle the uncertainties that lie ahead.

Continue the discussion!

Join us to further the discussion, share ideas and experiences meet industry leaders, and learn about the latest global real estate trends from experts. The ULI Europe Conference takes place 10-13 June in Milan. View the full programme here.