This hinders long-term planning and hampers economic activity.
If the lost investment is not clawed back, the supply-side potential of the economy will be permanently lower.
In addition, reduced trade and lower foreign direct investment could mean any potential productivity gains are less likely to be exploited.
So as this process of deglobalisation unfolds, we are forecasting growth of around 1 per cent in 2020 for both the euro area and US economies, and 1.2 per cent in the UK.
In China, we expect growth to slow below 6 per cent for the first time in almost 30 years.
Investors have experienced spectacular returns over the past few decades because of two of the strongest equity bull markets in history in addition to a secular decline in interest rates from 1980s highs.
The future looks somewhat less rosy.
Over the medium term, we expect that central banks will eventually resume the normalisation of monetary policy, leading to more attractive valuations for financial assets and a higher return outlook compared to our current forecasts.
Nonetheless, the return outlook is still likely to remain much lower than the experience of previous decades and, in particular, of the post-crisis years.
Looking ahead to the next 10 years, we expect annualised UK equity returns to be much more subdued than in the past, at around 4 per cent to 6 per cent.
The return outlook for non-UK equity markets, from a UK investor’s perspective, is expected to be in the 3.5 per cent to 5.5 per cent range, which is very similar to that of UK equities.
Nevertheless, exposure to other global equity markets in a broadly diversified portfolio can help to manage financial market volatility and avoid excessive concentration in just one market.
Our projected outlook for annualised UK and non-UK fixed income returns for the next decade is around 0.5 per cent to 1.5 per cent.
While this may look low, we still expect high-quality bonds to play a key role in reducing risks and improving stability within a portfolio.
Faced with this lower-return environment, investors may be tempted to look at strategies that overweight assets with higher than expected returns, or higher yields.
However, these strategies are unlikely, by themselves, to escape the low-return environment.
As our prior research has shown, investors will have a better chance of investment success if they focus on factors that are within their control, such as saving more, increasing their investment horizon, spending less and controlling investment costs.
Peter Westaway is chief economist and head of investment strategy for Vanguard Asset Management, Europe