Moving away from extractives and energy is becoming a time of opportunity for Qatar, the United Arab Emirates and Saudi Arabia. And British companies stand to benefit, says Claire Taylor, propositions design and delivery lead, trade transformation programme at NatWest.

 

It was called black gold for good reason, but the oil wealth derived in the Gulf is being invested to transform lives and economies. The region, in step with much of the world, is investing in net zero not only as a means of climate change mitigation but also for economic metamorphosis. As such, the Gulf is a dynamic, lucrative region for British companies seeking to build their cross-border trading and expand their international presence.

Three countries in the Mena region stand out: Saudi Arabia, the United Arab Emirates (UAE) and Qatar. These geographies are traditionally known for their oil and gas reserves and other natural resources, which have been exploited for decades. But nowadays the focus on extraction is being replaced by construction. In a world that is seemingly close to peak oil production and consumption, these three nations are naturally asking what’s next for their economies and their roles in international trade. Substantial urbanisation and the wider reinvestment of national wealth into infrastructure projects for the long term is part of a shared vision across the region that promises, ultimately, a more stable future that little resembles its past model.

According to the World Bank, Saudi’s gross domestic product (GDP) is worth US$1.1tn, while the UAE’s is US$507.1bn and Qatar’s is US$236.3bn. In the same order, they are seeing significant GDP growth of 8.7%, 7.8% and 4.2% per year.

Much of that growth is due to economic development, which has the potential to enrich trade with the UK.

 

Growing trade opportunities for UK businesses in the Gulf

As the world moves to net zero and as the Gulf region’s economies mature, there are other industries and sectors that businesses should explore. Key industrial areas we believe that British companies can establish and grow their presence in include energy, construction, finance, healthcare, technology and education.

Take, for instance, Saudi Arabia’s Green Initiative (SGI). This ambitious national plan is focused on combating climate change, improving quality of life and protecting the environment for future generations. Launched in 2021 by His Royal Highness Prince Mohammed bin Salman bin Abdulaziz, Crown Prince and Prime Minister, SGI aims to be a whole-of-society initiative, and its proponents claim it supports Saudi Arabia’s ambition to reach net-zero emissions by 2060. To achieve this, it is targeting the circular carbon economy and is pursued through three overarching targets: emissions reduction, afforestation, and land and sea protection.

The SGI is part of the wider Saudi Vision 2030, announced approximately a decade ago. By 2021, the Kingdom had announced more than US$1tn-worth of real estate and infrastructure projects. Standouts include the construction of 10 cities (the Neom project), a metro and a new airport for Riyadh, a metro for Jeddah and more than 1,000km of rail links.

According to the Department for Business and Trade, total UK exports to Saudi Arabia amounted to £13.1bn in the four quarters to the end of Q4 2023 (an increase of 14.5% or £1.7bn in current prices, compared to the four quarters to the end of Q4 2022). In 2021, the value of foreign direct investment (FDI) from the UK in Saudi Arabia was £5.1bn, accounting for 0.3% of the total UK outward FDI.

In a similar vein, the UAE’s Energy Strategy 2050 also represents opportunities for British businesses. It aims to triple the contribution to renewable energy and invest US$41bn to US$55bn by 2030 to meet the country’s increasing energy demand due to its rapidly growing economy. Qatar’s National Vision 2030 has similar goals.

 

Which sectors are the best natural fit for the region’s economies?

Here are our highlights for the long term.

Construction and infrastructure

As described, Saudi Arabia, Qatar and the UAE are undergoing a significant transformation in terms of urban development and infrastructure. We believe that British businesses involved in construction supply chains are at an advantage. This primarily includes architects and engineering consultants with relevant expertise and experience in similar projects in the UK, but there may be opportunities for more specialised businesses, too.

As well as high-profile mega-projects, these countries demand residential, commercial and industrial construction services.

Financial services

Financial services in the Middle East are developing at pace, driven by economic diversification and regulatory reforms. Financial hubs like the Dubai International Financial Centre and the Qatar Financial Centre offer regulatory environments that are familiar and conducive to international financial institutions.

Legal and professional services

The Middle East’s regulatory regime demands sophisticated legal and professional services. British law firms and consultancy agencies can offer their expertise in navigating international trade laws, among many other services. As economies diversify and integrate more closely with the global market, the demand for high-quality legal and professional services, advising businesses on how to enter markets, can only increase.

Healthcare and pharmaceuticals

Like many sectors in Qatar, Saudi Arabia and the UAE, the healthcare sector is set to expand, driven by population growth and wealth, higher levels of chronic disease, and substantial government investments.

Technology and innovation

Many of the new urban areas marked for construction are so-called ‘smart cities’. These initiatives require a wide range of technologies and could provide opportunities akin to those presented in construction and architecture.

Dubai’s ambition to become a global leader in blockchain technology and Saudi Arabia’s push towards AI as part of Vision 2030 may also create openings for British tech firms to provide their expertise.

Education

As these countries shift from energy-focused economic models, they will increasingly become knowledge economies. And this will be predicated on education. The Middle East is investing heavily in education to prepare its workforce for the future. Countries are focusing on improving educational outcomes and increasing access to quality education at all levels.

 

The trade opportunity for UK businesses is growing

In recent years, the UK has conducted seven rounds of trade deal negotiations, aiming to boost the UK economy by £1.6bn. In 2024, Rishi Sunak’s government participated in a two-day summit in Riyadh aimed at promoting further cooperation, with a reported delegation of 450 British businesses, although a deal has yet to be signed.

There is opportunity, and Britain’s tilt to the knowledge economy makes it an ideal trading partner with the region. But exploring the market means collaborating with trusted partners, both locally and at home.

At NatWest, we’re enhancing our trade proposition by maximising collaboration and investing in innovative technology. Our support facilitates trade between Mena and the UK, made stronger through our focus on how we serve our customers.

It’s still early days, and our focus is on three ways to improve:

Refining service

Our partnership with a global leading technology organisation provides a new trade back-office platform and portal for processing transactions, providing greater transparency and simplicity.

Delivering sustainable growth

Our support for customers continues to improve, and we’ve increased the credit limits we hold with financial institutions across key trade corridors. This means we can help more customers mitigate risk and improve their working capital when trading overseas.

Investing in our people

Facilitating trade requires engaged and dedicated staff who exhibit both tenacity and capability every day. Most importantly, we’ve been investing in our staff’s capability and knowledge so their appetite to succeed is best put to the service of our customers.

 

Top 5 goods exported by the UK to Saudi Arabia in 2023

  • Mechanical power generators (intermediate): £1.1bn
  • Cars: £448.2mn
  • Medicinal & pharmaceutical products: £314.5mn
  • General industrial machinery (intermediate): £218.8mn
  • Jewellery: £217.5mn

 

Top 5 services exported from the UK to Saudi Arabia in 2023

  • Other business services*: £5.2bn
  • Travel: £1.2bn
  • Financial: £710mn
  • Telecommunications, computer and information services: £366mn
  • Personal, cultural and recreational: £196mn

 

*Includes research and development, professional and management services, technical services, and trade-related services