Michael O’Brien FCA MAAT
- Partner, Accounts, Outsourcing and International
- +44 (0)330 124 1399
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Trade between UK and UAE has a long-standing history. The countries are committed partners on all fronts, with an enduring friendship and shared history linking both nations and peoples. Guided by an ongoing commitment to developing a robust partnership for the future, economic exchange represents an important area through which the two countries are expanding their relations to new horizons.
The UAE-UK trade relationship is experiencing continuous development in various fields including investment, trade, health, energy, education, space, tourism, food security, and technology. Through bilateral platforms such as the UK-UAE Business Council, the Joint Economic Committee and the Joint Taskforce, both countries identify and leverage joint opportunities for economic growth. Over 6,000 UK businesses operate in the UAE and UAE is home to over 100,000 UK nationals. UK companies are attracted to the UAE not only because of its world-class logistics and connections, but also because of UAE’s ability to serve as a strong hub to the emerging markets of Africa, Middle East, Central Asia and South Asia.
UAE has announced several economic reforms, including 100% foreign ownership in mainland companies which was restricted to 49% as per the earlier ownership structure, long-term residency visas, widespread reduction or waiving in licensing and business fees to attract companies. UAE is encouraging FDI in innovation and technology-driven sectors such as renewable energy, space, aerospace, fintech and artificial intelligence, the areas where UK companies already enjoy strong advantages. The UAE has become a major regional trading and tourism hub and provides a gateway to the Middle East’s most important economic centres.
The country’s plan to invest almost USD 2 trillion in infrastructure is nowhere comparable to other middle east countries, except Saudi Arabia. It is evident that UK’s departure from European Union has encouraged many UK businesses to explore more promising markets coupled with opportunities for expansion and have identified UAE as their launching pad.
The UAE is the largest recipient of UK foreign direct investment in the Middle East North Africa and Turkey (MENAT) region. In 2019, the stock of FDI from the UK in the United Arab Emirates was £7.8 billion which is 0.5% of the total UK outward FDI stock. In 2019, the total UK FDI abroad was £1.5 trillion. In 2019, the stock of FDI from the United Arab Emirates in the UK was £5.5 billion, which is 0.4% of the total UK inward FDI stock. In 2019, the total FDI in the UK was £1.6 trillion. The key areas of investment include education, energy, infrastructure, healthcare, renewables, financial and professional services. Total trade in goods and services (exports plus imports) between the countries was £12.0 billion in the four quarters to the end of Q2 2021. United Arab Emirates was the UK’s 23rd largest trading partner in the four quarters to the end of Q2 2021, accounting for 1.0% of total UK trade. This shows UAE-UK trade relationship is going from strength to strength. British companies are seeking new investments in the UAE and UAE investors are in turn looking at fresh business opportunities in a post-Brexit world which is expected to triple by 2023 in both volume and value.
It may be interesting to note the following statistics on how the latest trading activities between the two countries are placed:
Abu Dhabi based Mubadala Investment Company recently announced investments of £800 million ($1.1 billion) into British life sciences over five years and the UK government confirmed billions of dollars of new trade deals will be announced in clean energy very soon. To establish the terms of a step change in relations, the countries have agreed on the expansion of the Sovereign Investment Partnership, with an initial £1 billion joint investment in life sciences. As that investment cycle has reached its target and with rewards flowing, the partnership is now extended to include joint investments in technology, energy transition and infrastructure. All four sectors have been identified by the UK and UAE as priority areas for the foreseeable future.
It is noteworthy that the recent announcements of the UAE government despite the continuing challenges of the pandemic, which include a string of relaxed laws such as remote working visas, retirement visas, citizenship for talented and innovative expats, 100% company ownership in the mainland, and liberated laws around cohabitation and divorce aims at luring talented Brits and other nationalities to its business arena, employment sphere and to the podium of leisure living. It is expected to attract a high level of talented entrepreneurs and investors and is just one of many initiatives that focus on human capital to strengthen the UAE economy.
Being one of the leading and most popular tourist and business destinations in the world, the UAE offers world-class attractions and a multicultural lifestyle that cannot be found in most parts of the world. UAE has been ranked as the country with the most modern and advanced infrastructure and affordable quality of life in the Middle East. Real Estate, Travel and Tourism, Hospitality, Trading, Agritech, Cloud Computing, Augmented Reality & Virtual Reality are still being considered as the major business segments for investment.
The relationship between the UK & UAE is always future-driven, with a lot of excitement, confidence and based on a history that has been quite incredible. The UAE’s historical relationship with the UK is bound to strengthen as more British entrepreneurs look to start new businesses in the Emirates.
Pushpakaran Parambath, is a Senior Partner of Kreston Menon, a member firm of Kreston Global, an international advisory and accountancy network, for which Kreston Reeves is also a member. Find out more here.
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