The British Chancellor of the Exchequer Philip Hammond made a short New Year trip to the Gulf in the first few days of 2017. Visiting Kuwait, the UAE and Qatar in a quick two-day tour, he met with political leaders and financial officials, including for talks with the Abu Dhabi National Oil Company and the capital’s largest sovereign wealth funds.
It may have only been a couple of days but the visit could be incredibly important for future financial dealings for the UAE. With the UK government preparing to trigger Article 50 and get Brexit negotiations underway, the country’s relationship with the UAE could take on a greater importance.
Stronger Investment and Trade Ties
The main reason for the British Chancellor’s visit was undoubtedly to increase trade ties between the two nations. With all the unpredictability surrounding the future of UK trade deals with the rest of the EU once Brexit has been pushed through, the country will want to improve its trade elsewhere.
Another aim of the trip was to assess the current attitudes to post-Brexit Britain emanating from the UK. As the UAE currently accounts for around £13 billion (Dh58.77 bn) of the £30 billion trade the UK does annually with Gulf economies, we are an important partner. Stronger trade ties and investment from both sides will only make things better.
The Chancellor was no doubt also on the lookout for new opportunities that could be implemented in the near and longer term future. Being outside of the EU will present fresh opportunities for trade and business between the two nations that were not previously available due to EU restrictions.
Many of the Gulf investors in UK business are in it for the long haul. Given there has been no mass withdrawal over six months on from the UK’s referendum signalled that investment appetite from the UAE in the UK has not reduced and suggests both sides will be open to any fresh opportunities.
Straight after the Brexit result was announced the pound dropped to its lowest level in over thirty years. While it has recovered somewhat in the six months since, it remains a lot weaker than it once was.
As well as making it cheaper for those in the UAE to import goods and products from the UK, it has opened up many forex trading opportunities. Such volatility has made doing business with the UK from a UAE perspective far more beneficial with a weakened pound.
If the UAE strengthens its relationship with the UK now then it could hold many benefits in the future, especially depending on the outcome of the Brexit negotiations. The UK may find itself requiring more trade and investment from outside of Europe, and as one of the major Gulf investors in British trade, the UAE would be turned to.
All sorts of new, exciting and profitable opportunities could develop. So, if the UAE remains close to the UK it is more likely to be able to take advantage of them. Philip Hammond’s visit could prove to be important in the coming months and years.