British investments in the Arab Gulf
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British investments in the Arab Gulf

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Since the 1920s, Britain has played an active financial role in the Arab Gulf, as the overall value of trade between the UK and GCC countries reached £9.5bn billion by 2005. Over the next five years, it increased dramatically to nearly £14bn, to £32.2bn in 2016, and to a pre-pandemic total of £45bn by 2019.

In 2010, when David Cameron was the British prime minister, he intended to strengthen trade relations with Gulf countries.

In 2018, British defence exports had a record increase, and sales to KSA, UAE, Qatar and ME countries amounted to about 80% of the total. Annually, Britain has around £30bn in trade with the six Gulf countries.

The Gulf area is considered one of the biggest export destinations for the UK. The GCC is the 3rd largest importer from the UK outside of Europe, after America and China.

In numbers, massive trade deals!

United Arab Emirates

The UAE is the UK’s largest trading partner in the GCC, with the total trade between the countries reaching £17.5bn in 2017.

In spite of the coronavirus pandemic, the first part of 2020 saw trade of £3.6bn. The UAE ranks first among Gulf countries in trade with the United Kingdom

In terms of investment, the United Kingdom is the largest foreign investor in the UAE market, with a value of £14.9bn, as it accounted for 16% of foreign direct investment in the UAE through the end of 2018.

In the past six years, Britain alone, accounted for 20% of FDI into the UAE.

 Kingdom Saudi Arabia

Riyadh is London’s major trading partner in the Middle East, with around 200 joint ventures worth £12.7bn. There are also long-term mega projects in the energy, water, telecommunications, transportation and infrastructure sectors worth more than £290bn. There are around 30,000 British citizens living and working in Saudi Arabia.

According to the latest available data, the volume of trade between the two countries ranges between 3.6 and 5 billion British pounds annually. In the past 15 years, its value has reached about £55bn, with £16bn in exports from the Kingdom to Britain and £39.2bn in imports from it.

The volume of British direct investments in Saudi Arabia has reached SAR12.5bn, nearly two-thirds of which is concentrated in the industrial sector. It seems that the volume of trade and investment exchange is likely to rise dramatically if British companies and projects take advantage of the opportunities that Vision 2030 can provide.

Qatar

Bilateral trade reached £5.3bn in 2018, and around 4,500 British companies exported goods to Qatar, with around 500 goods imported.

The bilateral trade cooperation between the two countries recorded a significant increase as the volume of trade and economic cooperation between Qatar and the United Kingdom topped the list of British export and import sectors in 2020. The volume of trade exchange between Qatar and the United Kingdom increased by 21% over 2019, reaching £6.7bn. The annual volume of trade between Qatar and the United Kingdom is distributed throughout the goods and services sectors. The UK’s exports to Qatar amount to £3.3bn.

 

The number of British companies operating in Qatar has reached 1,134 so far, consisting of companies and representative offices, of which 993 are joint Qatari-British companies. Of these, 104 are British owned, and there are 35 British companies registered in the Qatar Financial Center.

Kuwait

The trade exchange between the UK and Kuwait reached nearly £2.9bn in 2018, increasing 20% in two years. The Kuwait Investment Authority office in London announced that they would continue their work after Brexit, as the direct impact on their investments is not noticeable.

More than 150 British companies are operating in Kuwait, including companies with major international brands.

Bahrain

This bilateral trade volume reached about £1.1bn in 2018-2019 (an increase of 90% from the previous year). The economic friendship between London and Manama was not limited to defence industries only, but also in various other fields. For example, the British transport giant “National Express” operates Bahraini domestic buses. There are also companies working in the construction and infrastructure sector, including air and rail transport. 

There are 90 branches of British companies in Bahrain, 500 commercial agencies, and more than 350 Bahraini companies with British partners.

The British community in Bahrain amounts to more than 10,000 people, one of the largest western communities there.

Oman

Trade between the UK and Oman increased by 90% from 2016 to around £2.8bn in 2018.

The United Kingdom is responsible for the largest amount of foreign investments there. Shell and BP are the most prominent British companies operating in the fields of oil and gas in Oman. They are establishing what they plan to be long-term relations with the state-owned, Oman Oil Company. They have an agreement to develop the Khazzan and Makarem gas fields over a 30-year period. The total investment is estimated at £11.6bn.

Mutual interests lead to joint investments

The economic and financial repercussions of Britain’s exit from the European Union go beyond the borders of the United Kingdom and the European Union, reaching the entire global economy, including the Arab region. It will certainly affect Britain’s financial, investment, and trade relationship with Arab countries in general and the Gulf in particular, as they may represent both parties’ positive opportunities.

Brexit may provide several economic opportunities and gains for Arab countries, especially the Gulf Cooperation Council countries, with an improvement in investment conditions and negotiating power with both the European Union and the United Kingdom. This is especially true concerning free trade agreements that aim to enhance trade and investment between the two parties.

While the Arab Gulf region represents a major economic and importer of British goods, and though it will not replace Europe in analysts’ eyes, it will surely supply the British economy with billions of pounds in the form of Gulf goods and investments in Britain. The trade exchange volume between the Gulf states and Britain amounts to £16bn annually in British services and goods to the Gulf. Britain also imports oil and gas from these countries.

The UK and GCC countries both need each other. The United Kingdom seeks to offset the trade losses it expects after Brexit by expanding into other markets, and the GCC countries want to ensure that the UK’s military and diplomatic support continues.

The future of relations

Efforts are underway between Britain and the Arab Gulf to establish a joint Gulf investment fund worth up to £3.8bn. Gulf governments will partially fund it.

British sources revealed that the administration of British Prime Minister Boris Johnson is seeking to boost capital flows to the country after the end of the transitional phase for Britain’s secession from the European Union.

The proposed fund will invest in major infrastructure projects and other important investments to key industries’ futures.

The large number of British ministerial visits to the Gulf region since the referendum on June 23, 2016, indicates that the Gulf region will be a UK priority in coming years. Clearly, there is a common desire between the two parties to grow trade in goods and services.

Many Gulf countries have taken it upon themselves to diversify and develop their economies apart from oil, by building high-level capabilities in non-oil sectors such as technology industries, tourism, financial services and investment hosting. These constitute a strong opportunity for British companies to enter these promising markets while reaping the benefits of the Arab Gulf efforts to improve the business environment.

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