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The UK signed a long-awaited free trade agreement with the oil-rich Gulf states on Wednesday that will remove tariffs on food exports, medical equipment and advanced technology.
The British government estimated that the deal, which provides some rare positive news for Sir Keir Starmer, the under-fire prime minister, could boost the UK economy by up to £3.7bn a year “in the long run”. That is equivalent to about 0.1 per cent of GDP.
The agreement with the Gulf Cooperation Council — a regional bloc that includes Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman — follows about two years of tortuous negotiations.
“Today’s agreement is a huge win for British business, and for working people who will feel the benefits in the years ahead through higher wages and more opportunities,” Starmer said.
“The Gulf states are valued economic partners and this agreement deepens that relationship, building trust and unlocking new possibilities for trade and investment.”
The UK said the deal — the first struck between the GCC and a member of the G7 — is expected to remove 93 per cent of Gulf tariffs on UK goods, or the equivalent of £580mn by the 10th year of the agreement being implemented, with two-thirds of tariffs removed on day one.
Services, which account for about 80 per cent of the British economy and more than half of the UK exports to the GCC, would gain guaranteed market access under this deal, it said. The deal was also expected to benefit Britain’s luxury carmakers, as well as its aerospace and electronics sectors.
Successive British governments have sought to lure greater trade and investment from the Gulf, which collectively manages about $5tn in sovereign wealth funds. The FTA is projected to boost annual bilateral UK-GCC trade of £53bn by 20 per cent.
The UK has drawn praise from Gulf states for its role in helping to defend them from Iranian attacks, with its Typhoon fighter jets used to intercept missiles and drones fired as they have flown missions over Qatar, the UAE and Bahrain.
William Bain, head of trade policy at the British Chambers of Commerce, said the deal would open new opportunities for inward investment, exports and supply chains.
“Services sectors like travel, transport, business advisory services will benefit from guaranteed market access. With £360mn in annual tariff reductions from day one that the deal comes into force, it will be a real boost for food and drink, automotive and manufactured goods,” he added.
Emad Turkman, chair of the British Chamber of Commerce Qatar, said the deal would create opportunities in multiple sectors including financial services, energy, construction, professional services, education, hospitality and technology.
The agreement has attracted criticism from some human rights groups, which accuse the UK government of turning a blind eye to abuses in the region by failing to negotiate any commitments from the Gulf countries alongside the deal.
“The UK has taken a moral step backwards and undermined the government’s own commitments on democracy, women’s rights and workers’ rights,” said Tom Wills, director of the Trade Justice Movement, a pressure group.
