The UK’s impending historic withdrawal from the European Union (EU) is opening new opportunities for advancing the position of the GCC as an economic powerhouse, according to a new report.
The report, published by Orient Planet Research, an Orient Planet Group venture, emphasized the positive impact of the ‘leave’ vote in strengthening the bilateral relations between the UK and the respective GCC countries.
“As a whole, experts are still confident that the robust ties between the GCC and the UK will remain regardless of the EU referendum results,” Nidal Abou Zaki, Managing Director, Orient Planet Research.
“The UAE, for example, is becoming more attractive among investors from the UK and the rest of the world as the government aggressively pursues the country’s transformation into a regional and global hub of the 21st century.”
The UAE and Britain have set a new target last year for a bilateral trade agreement that would more than double the current value to AED 135.24 billion by 2020. Both countries also sealed their Double Taxation Agreement this year, the report says.
Dubai in particular is in a very strong position with a competitive advantage as a rising global city and financial hub, attracting a host of international companies interested in relocating in the region.
In fact, The Dubai International Financial Center (DIFC) is already eyeing 1,000 of the world’s top financial firms to invest in the city, the report added.
Saudi Arabia remains confident Brexit would have little impact on its economy, given that the Kingdom is one of the UK’s biggest markets in the Middle East with exports valued at €5.5 billion in 2015, while Saudi investments in Britain were estimated at €62 billion.
The Kingdom has taken a precautionary stand, however, revising its investment policy following the referendum results. Some economic experts have warned of economic risks to Saudi Arabia if the UK ever fell into recession, noting that this would affect its perceived market for its planned economic activities under its Vision 2030 development agenda.
Qatar is the UK’s third largest export market in MENA region, with trade exchange reaching USD 4 billion in 2015. However, it also presents an opportunity for Qatar’s sovereign wealth fund to acquire more assets in the UK, the report explained.
According to the report, The EU has not been successful in reaching a free trade agreement (FTA) with the six GCC member states, highlighting the potentials of stronger bilateral trade.
The study recognises the reality of major adjustments and renegotiations of these countries in existing trade relations as an aftermath of Brexit.
However, it concurs with many industry findings that Brexit’s impact on the GCC markets will be minimal in the mid- and long-term, while financial markets and currencies will face major challenges in the short-term at most.