Today, ‘slowbalisation’ appears to be moving closer and closer towards deglobalisation. Recent disruptions to global value chains such as the COVID-19 pandemic, the war in Ukraine, increasingly pronounced ideological differences and the green transition, have prompted governments and corporations to reconsider external dependencies, and to look closer to home and to trusted partners for more resilient growth models.

This sentiment is transcending media headlines and political posturing, and is becoming part of general corporate rhetoric. Our Investment Sciences team have been studying corporate transcripts for mentions of ‘onshoring’, including sentiment. A small but notable fraction (4%) have mentioned onshoring in 2022. Striking, when this has been under 1% prior to the pandemic.

2. Deglobalisation isn't completely global

While M&A and jobs data suggests that deglobalisation is occurring, it is not happening uniformly across the planet. Increased onshoring of jobs is taking place primarily in Asia. Domestic employment is also increasing in the US and Europe, but this appears to balance local resignations, and the net trend in both regions is still towards globalisation, albeit among more junior roles.1

We also found evidence that fewer announced M&A deals have been completed recently than historical patterns would suggest. Moreover, deals between target firms in Europe and North America are less likely to succeed when the acquirer is outside these regions, especially for target firms in industries such as high tech, finance and retail. On the other hand, deals targeting firms in, for example, consumer staples, are more likely to succeed.

Similarly, the slowdown of M&A activity may not be caused solely by macroeconomic trends, but also by regulatory concerns, as the European Commission and the UK antitrust authority increase scrutiny on deals.