The UK government is ramping up its initiatives to finalize a free trade agreement (FTA) with the Gulf Cooperation Council (GCC) as part of a larger strategy to enhance the nation's economy in the face of growing economic pressures.

The GCC, consisting of Saudi Arabia, the UAE, Qatar, Bahrain, Oman, and Kuwait, has emerged as a crucial ally in Britain’s trade expansion following Brexit.

Negotiations for this agreement, which resumed in September 2024, are reported to be at an advanced phase, with both parties eager to reach a resolution.

For the UK, this deal is viewed as an essential instrument for stimulating economic growth, particularly as the nation grapples with internal challenges.

The Labour government, led by Prime Minister Keir Starmer, is eager to unlock investment opportunities, aiming to strengthen trade relations with the Gulf.

Economists suggest that an FTA could boost UK-GCC trade by 16%, potentially adding £8.6 billion ($10.7 billion) to annual figures.

Moreover, it is anticipated to raise UK workers' salaries by between £600 million and £1.1 billion each year and could contribute as much as £3.1 billion to the UK’s GDP by 2035.

The GCC is also motivated by the prospect of diversifying its economy away from reliance on oil.

Nations such as Saudi Arabia and the UAE have implemented substantial reforms to modernize their economies, particularly in areas such as technology, life sciences, and renewable energy.

The FTA is regarded as a crucial component of this transformation, encouraging collaboration in advanced sectors like artificial intelligence and digital economies.

The UK government has been collaborating closely with GCC officials to progress negotiations.

Significant visits, including Prime Minister Starmer’s journey to Saudi Arabia and discussions with Gulf leaders, have highlighted the FTA's importance.

With global uncertainties arising from ongoing trade disputes, including the US's threats of tariffs, both the UK and the GCC regard the agreement as a means to secure and broaden their trade relations.

Despite the advancements, hurdles still exist.

The negotiations have concentrated on tackling both tariff and non-tariff trade barriers.

While UK exports primarily enjoy tariff-free access to GCC oil and gas, other products encounter an average tariff of 5.5%.

Nonetheless, the removal of non-tariff barriers, such as regulatory and procedural requirements, would provide greater benefits for UK trade.

Gulf economic reforms have alleviated some of these barriers, but a final agreement could further simplify trade and investment transactions.

The intricacies of negotiations with a bloc like the GCC, which has unified its stance on trade agreements with other countries and regions, present additional challenges.

However, the positive momentum in discussions indicates that a deal may be closer than expected.

Industry experts believe both sides are eager to establish a precedent for future trade relationships, with the successful finalization of this agreement paving the way for similar deals globally.

As the UK continues its pursuit of a modern and comprehensive trade pact with the GCC, completing these negotiations is deemed crucial for enhancing the UK's global economic standing and supporting the GCC's economic diversification initiatives.