The next UK government must prioritise a GCC trade deal

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Britain and the Gulf states have long been solid trade and investment partners. Dating back more than a century, UK companies have played an important part in the region’s development – a role that has only accelerated since the discovery of oil and gas. 

Regional hydrocarbon wealth has been invested locally to turbocharge the transformation of desert states into first-world economies. And internationally, GCC wealth is being invested into the world’s foremost emerging sectors that are defining global growth.

During my time as the UK’s first HM trade commissioner, it was clear to me that Britain cannot take its historical relationships for granted. 

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While UK companies have done well in the region in the past, there is no guarantee this will continue as global competition increases. We must step up politically and commercially if we are to compete. 

Today the Gulf is the UK’s third-largest export market globally outside the EU, behind the US and China only, totaling £37 billion. This has grown by a staggering 67 percent since 2021 – and there is significant scope for it to grow further. 

Alongside the exports of UK companies, Britain has also been a major destination for inward investment. Gulf countries have invested more than £150 billion in the UK economy, supporting economic growth in the regions, providing much-needed venture capital and creating jobs.

Ensuring the UK remains an open and attractive destination for inward investment is critical in supporting domestic economic growth in the years ahead. 

With an impending election, I believe strongly that government-to-government relations are critical. Three priority areas include:

Partnerships

These really matter. We cannot engage simply on a short-term, transactional level. The strength of the relationship between leaders and ministers is pivotal. Never has this been more important.

The Financial Times reported only this week that Oliver Dowden, the deputy prime minister, visited the UAE to tend to the relationship, before leading more than 300 companies on a trade mission to Saudi Arabia. 

Trade is an important part of diplomacy – often referred to as economic diplomacy. If the diplomatic relationship is strong, trade relationships tend to expand; if it’s not, the reverse is true. I have seen first hand how trade has been impacted when relationships deteriorate. 

Investment

The government must ensure the UK remains an attractive and globally competitive destination for inward investment. Strengthening ties and developing joint programmes for research and development are vital. We have seen this in the creation of two £10 billion sovereign investment programmes with the UAE and Qatar in which capital has flowed into the UK. 

The ongoing success of such programmes, as well as flows from Saudi Arabia, Oman, Kuwait and Bahrain requires a top down, joined-up approach to partnerships. The UK’s Office for Investment will play an important role in realising these goals.

• In charts: How UK-GCC trade has soared
• Kingdoms hope to usher in a new era of UK-Saudi trade
• Oil and services grow UK-GCC trade to $83bn

Red tape

Removing barriers to trade through bilateral trade agreements should remain a cornerstone of trade relations. Negotiations are advanced for a Gulf-UK free trade agreement that will see most tariffs removed and red tape cut. Completing the work that has started should be a top priority.

Global trade is a competitive sport. British companies have a real opportunity to deepen their business with the Gulf. The role that an incoming UK government plays in promoting economic diplomacy and forging partnerships with the region’s leadership will define how successful Britain can truly be. 

If the UK does not step up, other countries will. And already are.

Simon Penney is a former HM Trade Commissioner to the Middle East and was awarded the Companion of the Order of Saint Michael and Saint George for his services to international trade and investment.