The new British government's decision to restart negotiations with the GCC countries to secure a free trade agreement (FTA) is anticipated to significantly boost two-way investment and trade flows. The UK government asserts that the long-awaited trade agreement with the GCC would present a substantial economic opportunity, with a total of £19 billion already invested in each other's economies by 2021. Negotiations for an FTA with the six GCC states—the UAE, Bahrain, Kuwait, Oman, Qatar, and Saudi Arabia—began under the previous Tory government in 2022, with the sixth round concluding in February this year.
Economists predict that an FTA with the GCC could further enhance the flourishing economic relations, enabling companies from both sides to capitalize on new opportunities. Jonathan Reynolds, the UK's Business and Trade Secretary, highlighted the recently elected Labour government's priorities for new trade deals, announcing the intention to initiate trade talks with the GCC, India, Israel, South Korea, Switzerland, and Turkey. The sixth round of FTA discussions between the UK and the GCC concluded in February, with the next round expected before the end of the year. A government statement following the February talks noted progress in 21 policy areas across 30 sessions.
Total trade between the GCC and the UK is estimated at around £59 billion. The UK's trade and investment relationship with the UAE stands at over £25 billion, making the Emirates Britain's 19th largest trading partner. UAE investment in the UK has surged to over £10 billion in the past three years. Over 13,500 UK companies export to the UAE, a number expected to rise with the implementation of the UK-GCC FTA, according to the UAE-UK Business Council.
Reynolds emphasized the importance of boosting trade abroad for a robust domestic economy. He stated that the UK is ready to resume trade talks to secure high-quality deals, providing businesses access to international markets, supporting jobs, and fostering growth. With exports totaling £855 billion, the UK ranked as the world's fourth-largest exporter in 2022. The government is dedicated to assisting British businesses in reaching global markets through various means, including FTAs.
In addition to FTAs, the government plans to unveil a trade strategy aligned with the industrial strategy, enhancing economic security and supporting net zero ambitions. Reynolds highlighted the ambitious trade program, aiming to leverage the UK's strengths to access dynamic economies worldwide. He concluded by stating that UK negotiating teams will focus on creating new opportunities for British firms to support jobs and drive the growth needed.
