On June 23rd, 2016, a referendum was held in the UK that saw 17.4 million people voting in favor of leaving the European Union, aka Brexit.
Britain formally left the EU in January 2020 but remains bound by most of its rules until the end of the year, but whether the legal wrangling continues beyond 2020 or not, the UAE stands ready to benefit in a big fashion.
Interest in trade
The UAE is one of UK’s largest export markets in the Middle East. There is a consensus among economists that the UK has time and again shown a keen interest in maintaining the most robust possible trading relationship with the UAE after the UK leaves the EU.
The UK-GCC Trade Working Group announced in December 2016, essentially examines how the two regions can best seek to deepen the trade relationship post-Brexit. This includes exploring non-tariff measures to help facilitate free-flowing trade. The UAE would see the most significant gain, with predicted profits of $425 million approximately due to increased exports to the UK.
Bilateral trade including GCC
The recent appointments of the UAE-UK Business Council co-chairs, Minister of State, Ahmed Al Sayegh, and the British Prime Minister’s chief strategic advisor, Sir Edward Lister, demonstrate the importance of this trade relationship at the most senior level.
In 2017, bilateral trade between the UAE and the UK totaled $22.7 billion), up 12.3% from 2016, according to official figures. By 2020, the UK government aims to increase its trade to about $32.65 bn, according to the United Nations Conference on Trade and Development (UNCTAD).
Outside the EU, the GCC is currently the UK’s second-largest export market behind the US. Last year the total trade in goods and services accounted for $54.8 bn, according to British government figures.
The UAE is Britain’s twelfth biggest trading partner globally and third outside the EU.
British government figures stated that the Gulf region accounts for $50.8 bn of the UK’s $57.2 bn trade with the Middle East. Those figures could rise sharply after Brexit, with the United Kingdom intent on pursuing independent trade deals.
Some 32% of GCC imports from the UK are in services, largely dominated by the health and education sectors.
The UK reportedly identified over $38 bn worth of new opportunities annually for British businesses in the GCC by 2021, with focus on the healthcare and defense sectors.
EU-GCC total annual trade in goods is $161.6 bn.
UK’s interest in the UAE
British businesses are seeking a safe haven in the UAE as the uncertainty over Brexit continues, according to Scott Cairns, managing director of Creation Business Consultants.
According to the UK Government website’s figures from 2018, there were over 5,000 British companies operating in the UAE, including BP, Shell, Rolls Royce, BAE Systems, Standard Chartered, HSBC, and John Lewis/Waitrose. There were 779 commercial agencies and 4,762 British brands had invested in the UAE.
Around 1.5 million British nationals visited the UAE in 2019.
Around 120,000 British ex-pats call the country home.
The UK encourages its own firms to invest in the UAE, such as BP, Shell, and Rolls-Royce.
The UAE is among the top markets for UK food and drinks globally.
The Lord Mayor of the City of London William Russell once said: “The UAE is the UK’s key trading partner in the region, making up 40% of GCC-UK trade. The UAE’s non-oil export and re-export trade volume to the UK stood at Dhs13.2 billion ($3.6 bn) in 2018.
UAE’s interest in the UK
Many Dubai buyers have also flocked to London, targeting lucrative areas such as the King’s Road in west London, Battersea, and White City.
Asides from its targeting of English Premier League football, including UAE Deputy Prime Minister Sheikh Maktoum al Nayhan’s notable purchase of Manchester City in 2018, Abu Dhabi has also funded universities including Durham, Exeter, Birmingham, and the London School of Economics.
The UAE has increased its investments in the UK since 2016. Emirati banks, for instance, increased their investments in the UK by 23% to $15.67 bn in the first quarter of 2020.
Britain has encouraged Dubai and Abu Dhabi investors to engage in the post-Brexit UK economy.
Free trade talks
With already extensive economic ties, the Emirati Minister of State for Foreign Affairs Anwar Gargash declared Brexit as a “catalyst for free trade” between London and Abu Dhabi last February.
The EU has been attempting to ink a free trade agreement with the GCC since 1990
“The prospect of a free trade agreement with the GCC, a rise in defense spending in the Gulf and the reaffirming of bilateral ties with a number of GCC countries all underscore the UK’s renewed devotion to its regional presence,” a report from France’s Foundation for Strategic Research said.