The United Kingdom on Wednesday became the first G7 country to sign a free trade agreement with the Gulf Cooperation Council, a six-nation bloc covering Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. The Department for Business and Trade said the agreement could boost the UK economy by an estimated £3.7 billion a year and raise UK wages by £1.9 billion annually in the long run.
What the deal covers
The agreement removes up to 93 per cent of GCC tariffs on UK goods. Once fully implemented, the deal is expected to eliminate around £580 million a year in tariffs on British exports to the region. Around £360 million of those reductions are expected to take effect on day one of the agreement entering into force.
UK exports expected to benefit include food and drink, medical equipment and devices, advanced manufacturing goods, and chemicals. Services firms, including financial services, fintech, engineering, legal and consulting, gain expanded market access under the deal. For the first time in a UK trade agreement, the GCC has committed to free flow of data, removing the requirement for UK firms to establish local data centres in the Gulf to handle UK customer information.
Scale of the trading relationship
Total trade between the UK and the GCC was worth around £61 billion in the most recent reporting period, making the bloc the UK's seventh largest trading partner. The GCC has an estimated population of over 60 million and combined economic output of around $2.2 trillion, with import demand projected to grow significantly over the next decade.
The agreement is the Labour government's fifth major trade deal, following agreements with India, the United States, the European Union and South Korea. Negotiations on the GCC deal began in 2022 under the previous Conservative government and continued under Labour after the July 2024 general election.
Government response
Prime Minister Keir Starmer described the agreement as "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". Business and Trade Secretary Peter Kyle said it "sends a clear signal of confidence" at a time of global trade uncertainty.
Chancellor Rachel Reeves said the deal was "proof we are backing British firms to compete and win globally" and would be "good for jobs, good for industry and ultimately good for consumers".
Criticism and caveats
Activist groups have criticised the agreement for lacking detail on human rights and labour protections. Several of the GCC member states have records of restrictions on workers' rights and limits on press freedom that have been raised by Amnesty International and Human Rights Watch in previous trade contexts.
The deal also requires ratification by all parties before it enters into force. The full text of the treaty runs to around 2,000 pages and will be subject to parliamentary scrutiny in the UK under the Constitutional Reform and Governance Act 2010.
What this means for UK businesses
UK exporters to the GCC region will need to review the specific tariff schedules and rules of origin set out in the agreement to identify where their products qualify for the new preferential rates. The Department for Business and Trade has published initial guidance and a tariff lookup tool. Smaller exporters, who currently account for a significant minority of the over 10,000 UK SMEs exporting to the region, are expected to benefit most from the elimination of administrative barriers.
Scottish exports stand to benefit by an estimated £580 million a year, with whisky, salmon and oil and gas services among the categories with the highest current tariff burden into the Gulf. Welsh and Northern Irish food and drink exporters are also expected to see gains.
Editor's note
This is a news report based on UK government announcements on 20 May 2026. The agreement is subject to ratification by all parties. Estimates of economic benefit are produced by the Department for Business and Trade and represent long-run projections. For broader UK business coverage, see the Kaeltripton explore index.
