City of London Lord Mayor eyes UK-GCC trade deal in H1 2023

WAM

• UK-GCC free trade deal talks to enter their second stage
• Growing GCC demand for international products and services
• City of London leading exporter of financial services

Negotiations to draw up a UK-GCC free trade agreement (FTA) could be completed in the first half of 2023, according to Vincent Keaveny, the Lord Mayor of the City of London.

The international ambassador for the UK’s financial and professional services sector said the City of London strongly supports the FTA talks with the GCC which will enter their second stage “in the coming weeks”. 

He admitted in comments published by UAE state news agency WAM that it is “always difficult” to negotiate with a number of member states involved but added: “I am optimistic, probably more optimistic than the last time when I visited the UAE a year ago about being able to get a GCC agreement finalised.

“I am hoping that we will move ahead, and with the political will on both sides, we might get an agreement in the first half of 2023.”

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In a telephone call with Saudi Crown Prince Mohammed last week, UK Prime Minister Liz Truss reiterated her focus on agreeing a strong UK-GCC trade deal and growing bilateral trade and investment in areas like aviation and clean technology.

Last month Dr Nayef Al Hajraf, secretary-general of the Gulf Cooperation Council (GCC), said he hoped that the talks would open new horizons for joint investment.

Equivalent to the UK’s seventh largest export market, the GCC bloc’s demand for international products and services is expected to grow to £800 billion ($909.71bn) by 2035, a 35 percent increase – opening huge new opportunities for UK businesses.

The talks are expected to culminate in a trade deal worth £1.6bn more a year to the UK economy, an increase of 16 percent, while around 10,700 small and medium-sized businesses from every UK nation and region exported goods to the GCC in 2020.

Keaveny’s comments came during a two-day visit to the UAE during which he aimed to strengthen the ties between the UAE and the UK, particularly in the financial and professional services sector and met the governor of Dubai International Financial Centre (DIFC).

John Martin St Valery, board member of the British Business Group Dubai and Northern Emirates (BBG), said: “I would say that Dubai is an obvious destination for the fintech companies – particularly those in the UK.

“We have seen a 22 percent increase in this sector in our new members to the BBG just in the last four months. There is a huge market for digitalisation and a small pool of true expertise so the market is there for newcomers to the region to help financial service entities in the Middle East develop digital-first solutions.”

Dishang Patel, co-founder/COO, Leading Point, added: “A lot of learnings from the UK can and have already been applied to the UAE simply through the talent capital that has migrated over to this jurisdiction.

“The standout opportunity in my opinion is in the fintech space which has seen mass adoption in the B2C world (mostly due to Covid) but not even close in the B2B space. This is where talent, experience, know how, and expertise from London and the UK can, and I believe will, play a major role.” 

The 693rd Lord Mayor of the City, who heads the City of London Corporation, said that the UK is also focusing on the green finance agenda which ties in with the UAE hosting the COP28 climate conference in Dubai in November 2023. 

“We are thinking how we can work together through sharing our experience since hosting of the COP26 in the UK, to make COP28 a huge success,” Keaveny explained.

He also highlighted a number of sectors for potential investment, including green sustainable investment, particularly in the infrastructure sector, and financial technology (fintech), saying: “Emirati investors should certainly be looking [to invest in these areas] in the UK at the moment.”

The UK is the leading exporter of financial services across the world, valued at £64bn, according to the City of London Corporation. The city houses more foreign banks and accounts for more international bank lending than any other centre.

According to latest figures, total trade in goods and services between the UK and UAE reached £13.6bn in the four quarters to the end of Q1, an increase of 21 percent or £2.4bn compared to the previous 12-month period.

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Total UK exports to UAE amounted to £8.3bn, up 10.3 percent, while UK imports from UAE rose by nearly 43 percent to £5.3bn. The UAE is the UK’s 24th largest trading partner.

The visit of Keaveny, a commercial lawyer, comes as it was reported that the UAE saw a 23 percent year-on-year rise in UK companies setting up in the country.

The increase comes as Britain contends with a stark economic outlook, with the most recent forecast from the British Chambers of Commerce predicting that there will be a recession before the end of this year, with inflation spiking to 14 percent. 

Against this backdrop British investors are increasingly looking to the UAE to incorporate their business given the emirates’ stability, low taxes and booming economy.

According to GCC-based corporate services provider CBD Corporate Services, British investors are increasingly attracted to the UAE’s business-friendly environment and its pro-business policies.