The UK has struck a trade deal with six Gulf states after four years of negotiations, in what the prime minister called a “huge win” for British business.
The deal with the Gulf Cooperation Council (GCC) – an alliance including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates – would boost the economy by £3.7bn a year and eventually increase domestic wages by £1.9 billion annually, the government said.
Tariffs will be removed on exports such as food, medical equipment and advanced manufacturing under a free trade agreement, while the deal includes commitments on the free flow of data.
Once the agreement is fully implemented, an estimated £580 million in duties a year will be removed based on current UK exports.
The GCC has also made commitments on anti-corruption for the first time, in a chapter which includes animal welfare, environment, innovation, labour and women’s economic empowerment. However, the government did not seek a specific human rights clause in the deal.
Negotiations on the deal began four years ago, when the expectation was that the deal could boost UK gross domestic product by £1.6 billion.
GCC states combined are equivalent to the UK’s 10th-largest trade partner, with demand for imports to the bloc forecast to double by 2050.
Current bilateral trade amounts to about £53 billion. The deal is projected to increase this by 20 per cent, with UK exports making up two-thirds of that trade.
Duties totalling £360 million will be removed as soon as the agreement comes into force, with “renewed certainty” for services firms paving the way for UK companies to expand in the Gulf, supporting “high-quality jobs for years to come”, the government said.
It is understood negotiators were able to achieve more than originally expected on the liberalisation of tariffs.
The GCC currently imports about 85 per cent of its food, with goods including cereals, cheddar cheese, chocolate and butter among those expected to become tariff-free.
For the first time, the GCC has made commitments on the free flow of data requirements, enabling UK businesses to work in the Gulf without having to store data in the region.
The agreement also preserves the UK’s right to regulate, with no requirements to alter UK standards.
Sir Keir Starmer said: “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.
“This government has now secured five major trade deals with international partners, delivering on our commitment to drive growth, support jobs and strengthen the UK economy.
“The Gulf states are valued economic partners and this agreement deepens that relationship, building trust and unlocking new possibilities for trade and investment.”
The government has previously struck trade deals with India, the US, the European Union and South Korea.
Trade secretary Peter Kyle described the GCC as “an important and growing set of markets” and said he was “proud” that the UK was the first G7 country to secure a trade deal with the bloc.
“For this government to meet the challenges that our country faces, incremental change won’t cut it,” he said.
“That’s why major trade deals like this one, and that we secured with India, the US, South Korea and the EU, are vital for moving the dial towards long-term, sustainable economic growth with benefits people and businesses can see and feel.
“At a time of increased instability, today’s announcement sends a clear signal of confidence – giving UK exporters the certainty they need to plan ahead and reinforcing the strength and stability of the UK’s trading relationship with the Gulf at a critical moment.”
Chancellor Rachel Reeves said the deal would “open up a world of economic opportunity”.
“Our fifth trade deal since taking office, it’s proof we are backing British firms to compete and win globally, delivering growth, security and jobs, and that we have the right economic plan,” she added.
The services sector accounts for about 80 per cent of the British economy and more than half of UK exports to the GCC.
