GCC Countries Strike Free Trade Agreement With UK, Bolstering Ties

2026-05-20 02:33:40

(MENAFN- Khaleej Times) The Gulf Cooperation Council (GCC) countries and the UK have reached a much-anticipated free trade agreement (FTA) on Wednesday.

The deal removes tariffs on food exports, medical equipment, and advanced manufacturing, plus includes first-of-its-kind GCC commitments on the free flow of data.

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Many sectors, including the food and drink sector, are set to benefit from the deal once it enters into force. UK exports of cereals, cheddar cheese, chocolate, and butter are just a few of the goods expected to become tariff-free, supporting British industry to grow.

The UK government said in a statement that its deals with the GCC and India are estimated to add over £8 billion a year to the UK economy in the long run.

“This agreement delivers the stability and certainty essential for prosperity, ensuring UK firms have secure access and growing opportunities across the Gulf,” said the statement.

UK's total trade with the GCC is worth £53 billion, according to the latest Office for National Statistics (ONS) figures and bilateral trade could increase by 19.8 per cent. This potentially adds an extra £15.5 billion a year to trade between the UK and GCC countries in the long run when compared to 2040 projections.

UK becomes the first G7 country to agree trade deal with the GCC, bolstering our partnership with a strategically vital region and securing economic resilience at home.

The statement added that the deal will remove an estimated £580 million in duties a year, based on current UK exports to the GCC, once the agreement is fully implemented, with £360 million worth of these estimated duties to be removed on day one of the agreement entering into force^].

UK Prime Minister Keir Starmer said the 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.

"The Gulf states are valued economic partners and this agreement deepens that relationship, building trust and unlocking new possibilities for trade and investment. The deal is estimated to add £3.7 billion to the UK economy every year in the long run when compared to 2040 projections and £1.9 billion in real wages, delivering for businesses and working people,” he added.

Rachel Reeves, Chancellor of the Exchequer, said this agreement is good for jobs, good for industry and ultimately good for consumers, opening up a world of economic opportunity with a strategically important region.

“UK services – which account for around 80% of the British economy and over half of the UK exports to GCC – will gain guaranteed market access under this deal. In 2024, there were over 400,000 business visits made from the UK to the Middle East so this deal will help British professionals including lawyers, engineers and consultants to travel more easily and stay longer in the region,” added Reeves.

Anna Anthony, EY UK Regional Managing Partner, said, the UK exported more than £20 billion in services to GCC countries last year, and this agreement should create even greater opportunities for UK professional services businesses in these high-growth markets.

“The agreement's visa transparency and digital trade provisions will make it easier for UK professionals to deliver in-person and cross-border services, providing businesses with the clarity and confidence to compete in these markets,” added Anthony.

Georges Elhedery, Group CEO, HSBC, said the GCC is a region of growing strategic importance and long-term opportunity.

“The UK is one of our home markets and we have a presence in all six GCC states. We see first-hand the opportunity this agreement can unlock and stand ready to help deepen economic ties and support businesses to connect, invest and grow,” he added.