A potential new trade agreement with the Gulf Cooperation Council shows that London is putting emphasis on consolidating ties with key non-EU nations, post-Brexit
THIS week marks the 50th anniversary of the United Kingdom’s June 1975 referendum of its membership of the European Common Market, the precursor of the European Union (EU). Yet, some five decades later, the trade policy of the UK is increasingly looking beyond Europe, post-Brexit.
In the last few weeks alone, the UK government has agreed a new trade deal with India, plus also a tariff agreement with the United States. UK ministers, including Chancellor Rachel Reeves, have said that this further deal could be finalised swiftly in the form of a new trade agreement with the Gulf Cooperation Council (GCC) comprising Saudi Arabia, United Arab Emirates (UAE), Bahrain, Oman, Qatar and Kuwait.
While the GCC economy is, collectively, not nearly as large as that of the United States or even India, the deal would be a significant prize with the Middle Eastern bloc’s total GDP of around US$2 trillion in 2022. According to the World Bank, if the GCC continues to grow at a business-as-usual rate, combined GDP would grow to about US$6 trillion by 2050.
A second reason why the UK government would celebrate a deal is that the GCC has signed relatively few such agreements to date, including a pact with South Korea. A further big prize for London of a GCC deal could be further, open access to investment from Gulf sovereign wealth funds which tend to be cross-sector investors who often take a long-term multi-decade economic perspective.
Total UK-GCC bilateral trade is currently worth around £60 billion (S$104.5 billion). This makes the GCC bloc as a whole equivalent to the UK’s fourth largest non-EU export market behind the US, China and Switzerland.
A UK deal with the GCC is forecast to add as much as £1.6 billion to this existing bilateral trade in the short term. The UK government hopes that the value will rise by an additional £8.6 billion a year by 2035.
