Structural Amplification in UK Production Networks between 2017 and 2022

The UK economy experienced three major shocks between 2017 and 2022: Brexit, the pandemic, and the European energy crisis. This paper asks whether these events changed the structure of the UK's production network, using detailed data covering 12 UK regions and 105 industries. A key finding is that conventional measures can be misleading. On the face of it, the UK economy appeared to become more interconnected over this period, with standard input‐output multipliers rising by around 5‐6 per cent. However, once inflation and sector-specific price changes are stripped out, that increase disappears. The UK's average multiplier was essentially unchanged. The more important change was structural. Measures of how shocks propagate through supply chains show that the production network became more amplifying and more concentrated, with most of this shift occurring in 2021‐22. The evidence points overwhelmingly to the energy sector, especially electricity and gas, as the source of this change. Brexit‐related effects appear smaller, while pandemic effects are diffuse. The policy lesson is that resilience depends not only on average interconnectedness but also on where influence is concentrated. The energy‐price shock exposed the extent to which a small number of strategically important sectors can reshape the transmission of disturbances across the wider economy. Monitoring these structural vulnerabilities may be as important as tracking headline measures of economic activity.