Deputy Prime Minister Oliver Dowden has expressed optimism that a free trade deal with the Gulf Cooperation Council (GCC) could be finalized this year.
Speaking at a business conference in Riyadh, Saudi Arabia, Dowden stressed that the UK government is prioritizing this agreement with the six-member GCC, which also includes Saudi Arabia, the United Arab Emirates and Qatar.
Highlighting the important trading relationship, Dowden noted: “People forget that the GCC is actually Britain's fourth largest trading partner.” When asked about the likelihood of the deal being completed by the end of the year, he said: “I'm hopeful, of course. But as always, just as the GCC should get the best deal, we should get the best deal.”
Since leaving the European Union, Britain has signed three free trade agreements. Securing a deal with the energy-rich GCC would be a timely success for Prime Minister Rishi Sunak's government, especially with a general election on the horizon. This comes after recent setbacks, including stalled negotiations with Canada and India.
According to Deloitte, demand for imported goods and services in the Gulf countries is expected to increase by 35% to £800 billion by 2045. A deal would allow British companies to benefit significantly as services account for more than half of British exports to the make up GCC. . Currently, British companies pay an average of 5.5% in tariffs on exports to the Gulf. The UK government estimates that a trade deal could boost annual wages by £600 million and boost GDP by around £1.6 billion by 2035.
The negotiations, which began in 2022, were complex, given the need to reach a regional agreement with six diverse and often competing countries. These countries pose several barriers to foreign investment and lack a shared regulatory system. In addition, Britain has faced tensions with the UAE, a key regional ally and financial center, over geopolitical issues. However, sources familiar with the negotiations have indicated that these disputes are not expected to hinder the progress of the FTA.
Domestically, the British government is under close scrutiny over its expansion of trade with Gulf states, several of which have been accused of suppressing dissent. While Saudi Arabia has made progress toward social and economic reforms, British officials have privately expressed concerns about the crackdown on dissidents.
During the trade delegation in Riyadh, Dowden and Lord Johnson of Lainston, Minister of State for Business and Trade, praised Saudi Arabia's business potential. Dowden highlighted the £17 billion in bilateral trade with Saudi Arabia and expressed hope of increasing this to £30 billion as the kingdom pursues ambitious projects to diversify its economy away from dependence on oil. “I think there is huge opportunity here,” Dowden added.
With both sides showing a strong commitment to finalizing the agreement, a successful deal with the GCC could provide a significant boost to Britain's economic prospects.
