LONDON - Britain has become the first G7 country to reach a trade agreement with the Gulf Cooperation Council or GCC, an economic bloc of six Gulf countries. This deal is projected to add 3.7 billion pounds or 5 billion US dollars per year to the British economy.
Launching an Arab News report, Thursday, May 21, the British government said the agreement also has the potential to generate a real wage increase of 1.9 billion pounds.
The essence of the agreement is on tariff cuts. Around 580 million pounds sterling of duties on British goods exported to the Gulf will be phased out. Of that amount, 360 million pounds sterling will be immediately removed after the agreement comes into force.
British Prime Minister Keir Starmer called this deal a "major victory for British business". This is the fifth major trade agreement of his government after agreements with India, the United States, the European Union, and South Korea.
Starmer said the Gulf countries are important economic partners for Britain. This deal, he said, opens up new opportunities for trade and investment.
GCC Secretary-General Jasim Al-Budaiwi said the agreement would strengthen the economic corridor of the two regions for future generations.
British Business and Trade Minister Peter Kyle said the agreement gave certainty to British exporters and strengthened trade ties with the Gulf.
If combined with the newly announced UK-India deal, the two agreements are expected to add more than £8 billion a year to the UK's gross domestic product compared to the 2040 projection.
British food products also benefit. The British government said opportunities were open for butter, cheddar cheese, biscuits, and chocolate producers. GCC imports more than 80 percent of its food needs.
The automotive industry and retailers such as Holland & Barrett are also expected to benefit from lower tariffs, stronger intellectual property protection, and more streamlined customs procedures.
The services sector is an important part. Services account for about 80 percent of the British economy and almost half of British exports to the GCC. Through this agreement, the British services sector has guaranteed market access.
British professionals, including lawyers, engineers, and consultants, are also expected to travel more easily and stay longer in the Gulf region. Visa procedures will be made more digital and easy to manage.
The technology sector has a new space. For the first time, British companies can store and process data outside the Gulf region. This means they don't have to build expensive local data centers.
The British government estimates that bilateral trade between the UK and the GCC could rise by 19.8 percent. Total bilateral investment reached 18 billion pounds sterling in 2024, including for infrastructure projects such as Heathrow Airport.
Rayan Qutub, Chairman of the Logistics Committee of the Jeddah Chamber of Commerce, told Arab News that the UK-GCC trade agreement is an important part of Saudi Arabia's economic transformation under Vision 2030.
According to Qutub, this agreement supports Saudi Arabia's direction to become a global trade and logistics center. Better trade flows and faster customs processes are also considered to strengthen supply chains and the private sector in Saudi Arabia.
Economist Jassem Ajaka considers this agreement important for the Gulf countries who want to reduce their dependence on oil. Britain brings expertise in the fields of finance and advanced services, while the GCC offers a large and fast-growing market for Britain after Brexit, namely the exit of Britain from the European Union.
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