• The value of the UK’s trade with the GCC is about $73 billion. The free trade agreement will increase trade by 16% and contribute $2.1 billion to the British economy in the long term.
• The GDP of the GCC countries is approximately $2.2 trillion, and they have free trade agreements with New Zealand, Singapore, and others, while also negotiating with the EU, India, and China.
• While the GCC remains heavily dependent on oil and gas, Saudi Arabia, the UAE, and Qatar are investing hundreds of billions of dollars to diversify their economies and develop sectors such as artificial intelligence, chip manufacturing, and tourism
Bloomberg reported that the UK is in the final stages of negotiating a free trade agreement with a coalition of Middle Eastern nations, including Saudi Arabia, according to Al Qabas newspaper.
Officials from the United Kingdom and the Gulf, who asked not to be identified due to the private nature of the information, stated that the agreement with the Gulf Cooperation Council (GCC) is a priority for British Prime Minister Keir Starmer’s government as it seeks to boost economic growth and attract foreign investment. The agreement may be signed before the end of this year.
According to the British government, the value of the UK’s trade with the GCC is approximately $73 billion (£57 billion). It believes that the free trade agreement will increase trade by 16% and contribute $2.1 billion to the British economy in the long term.
The Department for Business and Trade said in a statement to Bloomberg, “Trade deals like these play a vital role in boosting the UK economy. We are seeking to conclude a modern business deal with the Gulf as a priority, and our focus is on securing a deal that delivers real value to companies on both sides, rather than simply completing it by a specific date.”
UK’s Labour government poised for political boost
Bloomberg reported that if a deal is reached soon, it would provide a political boost to the Labour government, which has not signed any free trade agreements since taking power in July.
During his election campaign, Starmer promised to reset international relations and attract more foreign investment to stimulate the economy, as free trade agreements can enhance business between countries by reducing tariffs and easing other trade barriers.
The UK has struggled to negotiate trade agreements since leaving the EU in 2020. While agreements have been signed with countries like Australia and New Zealand, talks with the United States and India have stalled. Other countries still in discussions with the UK include Switzerland and South Korea.
GCC’s $2.2 trillion economy ranked as UK’s 7th-largest export market
The agency reported that the gross domestic product (GDP) of the Gulf Cooperation Council (GCC) countries is approximately $2.2 trillion, nearly the same as Brazil’s GDP. The Gulf countries combined were the seventh-largest export market for the United Kingdom last year, according to British government data.
The GCC countries have free trade agreements with New Zealand, Singapore, and several other countries. They are also in negotiations with the European Union, India, and China, though these talks have been ongoing for years.
While the GCC remains heavily dependent on oil and gas, Saudi Arabia, the UAE, and Qatar are investing hundreds of billions of dollars to diversify their economies and develop sectors such as artificial intelligence, chip manufacturing, and tourism. They view foreign investment as essential to their transformations.
They also have some of the world’s largest sovereign wealth funds. The Saudi Public Investment Fund, Mubadala Investment Company in Abu Dhabi, and the Qatar Investment Authority have been major sources of foreign investment in the UK over the past decade.
UK-GCC trade negotiations
The UK and the Gulf Cooperation Council have held seven rounds of trade negotiations since 2022. Business and Trade Minister Jonathan Reynolds was in Dubai, the UAE’s commercial capital, this month as part of the UK’s efforts to conclude the talks.
Reynolds told Bloomberg on November 1 that “We see a real opportunity here, and a very strong partnership. The trade agreement could significantly improve this.”
The UK government has stated it will not compromise its environmental, public health, animal welfare, or food standards in talks with the Gulf Cooperation Council. Additionally, it has emphasized that the NHS and the services it provides are not on the table.
The FTA is likely to follow as some Gulf countries pursue individual trade agreements with the United Kingdom. The UAE has signed several bilateral deals, called comprehensive economic partnership agreements, in recent years, which often address areas of trade not covered by Gulf free trade agreements.
