Britain Clinches $5Bn Gulf Trade Deal in Shadow of Iran War

• British inflation cooled by more than expected in April, but the slowdown did little to mask a tough outlook for households, with global costs from the Iran war set to hit them harder later this year.
• Britain said on Wednesday, May 20, 2026, that it had secured a trade deal with the Gulf Cooperation Council (GCC) worth $5Bn a year in the long run, deepening economic ties with allies in a region dealing with the fallout from the Iran war.
• The deal with the GCC, which consists of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, comes after U.S.-Israeli strikes against Iran in February triggered Iranian attacks on other countries in the region, putting strain on energy and food supplies. At a time of increased instability, Britain’s Trade Minister Peter Kyle said the announcement sends a clear signal of confidence, giving UK exporters the certainty they need to plan ahead.
• The British government noted that the deal would be worth £3.7Bn each year in the long term, more than double a previous estimate of £1.6Bn, as the final deal went further on both trade liberalisation and service sector commitments than previously expected. In addition, it will remove 93% of GCC tariffs on British goods, equivalent to the removal of £580Mn worth of tariffs by the deal’s tenth year. Two-thirds of the tariffs will be removed as soon as the deal comes into force.
• Autos, aerospace, electronics, and food and drink are among the sectors expected to benefit, with cereals, cheddar cheese, chocolate, and butter all becoming tariff-free. In return, Britain has lowered tariffs to the GCC, though the countries’ main exports to Britain, oil and gas, are already tariff-free.
• On services, Britain locked in current access to the GCC so businesses could expand without facing new barriers, while Gulf countries can also grow their own service sectors through the deal. The agreement spans trade in goods and services, financial services, digital trade, investment protection, telecommunications, and other areas.
• However, the deal has drawn criticism from campaigners because it does not contain any language around human rights. Tom Wills, director of the Trade Justice Movement, said that by failing to negotiate enforceable human rights protections, the UK had taken “a moral step backwards.”

(Source: Reuters)