UK-GCC FTA Negotiations Make Significant Progress

Chief Negotiator tells Asharq Al-Awsat deal will increase trade 16%

Tom Wintle, Chief Negotiator UK-Gulf Cooperation Council FTA, and Acting Chief Negotiator for the GCC Fareed bin Saeed Al-Asaly. (Asharq al Awsat)
Tom Wintle, Chief Negotiator UK-Gulf Cooperation Council FTA, and Acting Chief Negotiator for the GCC Fareed bin Saeed Al-Asaly. (Asharq al Awsat)
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UK-GCC FTA Negotiations Make Significant Progress

Tom Wintle, Chief Negotiator UK-Gulf Cooperation Council FTA, and Acting Chief Negotiator for the GCC Fareed bin Saeed Al-Asaly. (Asharq al Awsat)
Tom Wintle, Chief Negotiator UK-Gulf Cooperation Council FTA, and Acting Chief Negotiator for the GCC Fareed bin Saeed Al-Asaly. (Asharq al Awsat)

Chief Negotiator – UK-GCC FTA, Department for International Trade Tom Wintle revealed that the UK and Gulf Cooperation Council (GCC) countries have made “good progress” in negotiations to sign a free trade agreement (FTA).

Speaking on the eve of the third round of talks kick off between the parties in Riyadh, he told Asharq Al-Awsat that both sides are eager to strike an ambitious, comprehensive and modern deal.

He estimated that the deal would help increase trade between the UK and GCC by no less than 16% and increase the UK’s GDP by around £1.6 billion.

What does the UK aim to achieve from this third round of negotiations in Riyadh?

My team and I are excited to be in Riyadh for Round 3 of negotiations. We have made good progress so far and we want to keep the momentum going. This week we have an opportunity to work with GCC colleagues to build on our work and tackle some of the more challenging parts of the deal.

A free trade agreement (FTA) between the UK and GCC will be a substantial economic opportunity for all of our countries, and a significant moment in the UK-GCC relationship.

How many negotiators are involved from both sides?

In total, more than 100 UK negotiators from across our government are taking part in this round of negotiations. Round 3 is taking place in a hybrid fashion, with a number of UK negotiators travelling to Riyadh and others taking part virtually. We expect similar numbers of GCC negotiators.

How optimistic are you regarding reaching a deal? And do you have a targeted timeline for concluding the negotiations and signing the deal?

There is strong political will on both sides. The UK and GCC have committed to negotiate an ambitious, comprehensive and modern free trade agreement fit for the 21st century. We’ve made significant progress for such an early stage of negotiations and have discussed every policy area in negotiations so far.

We have always been clear that negotiating an ambitious agreement is more important than meeting any particular deadline. Our aim is to secure a deal that delivers the maximum possible benefit for businesses on both sides.

If a deal is signed, what impact will it have on trade between the UK and the GCC?

A UK-GCC FTA will be mutually beneficial for the UK and GCC economies. Our economies complement one another and there is limited direct competition between our businesses. A trade deal will strengthen supply chains, helping to grow the domestic industries that we each are specialized in.

Our analysis shows that a deal is expected to increase trade between the UK and the GCC by at least 16% and increase UK GDP by around £1.6 billion in the long run. A highly ambitious FTA, which the UK is pushing for, could deliver even greater gains. So, the more ambitious we are in negotiations, the greater the gains for everyone. It is a win-win scenario.

Which policy areas are discussed in the negotiations? And which are excluded?

We have discussed all areas that are included in some of the most ambitious and modern FTAs that have been agreed upon around the world in recent years. This involves going beyond the arrangements we already have in place to remove barriers, improve the business environment and make it easier to invest in each other’s economies. We have also discussed working together on modern areas of trade, such as innovation, digital and the environment.

We are keen to do a deal that would bring the biggest possible benefits to UK and GCC businesses. An FTA can support the GCC countries’ Vision Plans and enhance the private sector's ability to drive economic growth. We have genuinely complementary economies and there are exciting opportunities in all sectors.

The GCC is equivalent to the UK’s seventh largest export market. A deep, comprehensive FTA with the whole bloc will deliver the greatest economic and strategic benefits for both sides.

Our priority is an ambitious agreement with the whole of the GCC and there is strong political will from all sides. Within this agreement, there is the opportunity to secure additional commitments where some members can go further. We will make full use of these opportunities to ensure we maximize the benefits with individual GCC Member States.

Has Brexit bolstered the UK’s negotiating position?

The UK took control of its trade policy when we left the European Union. We are the fifth biggest economy in the world and the second biggest services exporter. Now we are independent we can negotiate modern, comprehensive and ambitious FTAs with partners like the GCC.

We have already signed trade deals with 71 countries, plus the European Union that account for £814 billion of trade, and we are now negotiating new deals with GCC, India, Canada, Mexico and Israel.

By the same token, do current economic woes in the UK weaken its negotiating hand?

The UK was the fastest-growing economy in the G7 last year, with capital investment at record levels of around £600 billion maintained over the next five years. We are the sixth biggest investor in the GCC, with a total of £31 billion invested in the last 20 years. Our bilateral trading relationship increased by 76% according to the latest annual figures, from £23.6 billion to £54.5 billion. However, the real strength of our relationship is measured in decades and centuries: ours is a long-term partnership, not one based on economic cycles.



UK Budget Deficit for 2025/26 Narrows to Six-year Low

Skyscrapers in London's financial district (Reuters)
Skyscrapers in London's financial district (Reuters)
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UK Budget Deficit for 2025/26 Narrows to Six-year Low

Skyscrapers in London's financial district (Reuters)
Skyscrapers in London's financial district (Reuters)

Britain's budget deficit for the last financial year narrowed to a six-year low as a percentage of economic output although borrowing for March alone exceeded forecasts, official data showed on Thursday.

The Office for National Statistics reported 132.0 billion pounds ($178.1 billion) of public sector net borrowing in the 2025/26 financial year that ⁠ended in March.

That ⁠was 0.7 billion pounds less than the most recent forecast from the Office for Budget Responsibility and down from 151.9 billion pounds in 2024/25.

Equivalent to 4.3% of ⁠economic output - in line with the OBR prediction - the deficit was the smallest since the 2019/20 financial year, which ended just as the response to the COVID-19 pandemic caused debt to soar.

Debt interest spending in 2025/26 was 97.6 billion pounds, up from 85.4 billion pounds a year ⁠previously ⁠and marking the second-highest figure in cash terms since 2022/23, when inflation soared after Russia's invasion of Ukraine.

Last week, the International Monetary Fund cut Britain's economic growth forecasts for 2026 by more than for any other Group of Seven nation due to the country's exposure to higher energy prices with its heavy use of natural gas.

"A more stagflationary backdrop is forecast to take shape, with speculation already building about the impact of weaker growth on the Chancellor's headroom," Nabil Taleb, economist at PwC UK, said, referring to Reeves' ability to meet her borrowing target.

"Recent moves in bond markets, with gilt yields briefly touching 5% for the first time since 2008 before easing, also highlight the UK's vulnerability to uncertainty."

In March alone, the ONS reported public sector net borrowing of 12.6 billion pounds. Economists polled by Reuters had a median forecast of a 10.3 billion-pound deficit for the month.


Saudi Arabia, Philippines to Join JPMorgan Emerging Market Bond Index in 2027

FILE PHOTO: Signage is seen at the JPMorgan Chase & Co. New York Head Quarters in Manhattan, New York City, US, June 30, 2022. REUTERS/Andrew Kelly/File Photo
FILE PHOTO: Signage is seen at the JPMorgan Chase & Co. New York Head Quarters in Manhattan, New York City, US, June 30, 2022. REUTERS/Andrew Kelly/File Photo
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Saudi Arabia, Philippines to Join JPMorgan Emerging Market Bond Index in 2027

FILE PHOTO: Signage is seen at the JPMorgan Chase & Co. New York Head Quarters in Manhattan, New York City, US, June 30, 2022. REUTERS/Andrew Kelly/File Photo
FILE PHOTO: Signage is seen at the JPMorgan Chase & Co. New York Head Quarters in Manhattan, New York City, US, June 30, 2022. REUTERS/Andrew Kelly/File Photo

J.P. Morgan said on Wednesday that Saudi Arabia and the Philippines will be added to its local currency emerging market debt index from January 29 next year.

The inclusion will cover Saudi riyal-denominated sovereign sukuk and Philippine peso-denominated government bonds, both entering the widely tracked GBI-EM ⁠index series.

Their weights ⁠will be introduced gradually, with Saudi Arabia expected to reach 2.52% and the Philippines 1.78% once fully phased in.

The update is part ⁠of a broader index adjustment, which will lower the "Country Cap" - the maximum weight, or share, any single country can hold in the "diversified" index - to 9% from 10%.

As a result, major markets including China, India, Mexico, Malaysia, and Indonesia will see their ⁠weight ⁠reduced to the new limit.

Based on current eligibility criteria, about eight Saudi sovereign sukuk with a combined value of roughly $69 billion could be included, JPMorgan said.

For the Philippines, nine eligible government bonds with a combined value of around $49 billion are under consideration.


Oil to Fabric: Middle East Crises Reshape Global Fashion

A worker arranges spools of thread at a textile factory in Haiyan, Jiangsu province, China (Reuters)
A worker arranges spools of thread at a textile factory in Haiyan, Jiangsu province, China (Reuters)
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Oil to Fabric: Middle East Crises Reshape Global Fashion

A worker arranges spools of thread at a textile factory in Haiyan, Jiangsu province, China (Reuters)
A worker arranges spools of thread at a textile factory in Haiyan, Jiangsu province, China (Reuters)

Rising oil prices are no longer just an energy market story; they are feeding directly into the cost of clothing. From petrochemical plants to fabric mills and retail racks, a complex supply chain is passing on higher costs, pushing up the final price consumers pay.

According to the “Materials Market 2025” report by the Organization for Textile Exchange, polyester makes up about 59% of global fabric output, with roughly 88% produced from non-recycled petroleum sources, leaving the industry exposed to energy price swings.

Oil prices have surged about 32% since the start of the US-Israeli war on Iran on Feb. 28, approaching $100 per barrel.

Fabrics under oil pressure

Amal Saqr, a textile design consultant, said the sector is highly sensitive to shifts in oil prices because of its reliance on synthetic fibers.

More than 60% of fabrics used in global clothing production depend on petroleum-based materials such as polyester, nylon and acrylic, she said, adding that any rise in oil prices feeds directly into fabric costs.

She pointed to 2008, when polyester prices jumped about 30% within three months as oil hit record highs, forcing Asian spinning mills to cut output by 20% to 25%.

Disruptions in the Red Sea between 2023 and 2024 also drove shipping costs up by about 300%, raising raw material costs and straining supply chains.

Yemen’s Iran-aligned Houthis began targeting ships linked to Israel on Nov. 19, 2023, using drones and missiles.

Natural fabrics not immune

Natural fibers such as cotton and linen avoid direct reliance on oil, but are still exposed to energy costs, Saqr said, noting that farming depends on fertilizers, fuel and transport.

The global fertilizer crisis in 2021 pushed prices up about 80%, driving cotton prices higher by roughly 40%. Later disruptions in the Strait of Hormuz added another 40% increase in fertilizer costs due to shipping delays.

Global cotton production reached about 24.5 million tons in 2024, or roughly 19% of total fiber output, making it less dominant than synthetic fibers but relatively more stable in pricing, according to the Textile Exchange report.

Rising production costs

Higher energy prices are hitting every stage of production, from spinning to dyeing and drying, Saqr said.

With already thin margins, textile factories face a stark choice: raise prices or cut output, both of which ultimately hit consumers.

World Bank data shows operating costs for textile factories in several countries have risen by about 18% following recent energy price increases.

Import markets feel it fast

Import-dependent markets are quick to absorb shocks from shipping or energy disruptions, Saqr said.

Shipping costs from Asia have lifted synthetic fabric prices by 10% to 18%, while imported cotton prices have climbed by 15% to 25%.

Rerouting shipments from the Strait of Hormuz to the Cape of Good Hope has added 10 to 14 days to transit times, leading to shortages and swings in the availability of fabrics and garments.

Value chains under rethink

Burak Cakmak, chief executive of the Saudi Fashion Commission, said the impact of oil prices is not immediate, as final pricing reflects a full value chain including production, marketing and distribution.

Instead of passing costs on, many brands are rethinking how to create value, improving efficiency and working more closely with suppliers, he said.

He also pointed to a shift toward localized production, with brands operating closer to their markets and managing inventory more tightly to control costs and improve flexibility.

Sustainability gains urgency

Sustainability is no longer just an environmental concern; it is tied to efficiency and long-term economic viability, Cakmak said.

The sector is moving toward circular models, including recycling and waste reduction, practices that are becoming essential to improving operations.

Designers double down

Anna Zinola, director of Istituto Marangoni in Riyadh, said rising oil prices are reinforcing, not reshaping, designers’ shift toward more conscious material choices.

Sustainability is embedded in the curriculum as a core approach guiding every design decision, she said.

Students are trained to balance cost, sustainability and consumer demand, while exploring material innovations that combine environmental and commercial goals.

Prices set to rise

Reports by McKinsey and Euratex expect global clothing prices to rise by 8% to 12% over the next year, as supply chain pressure persists and shipping costs remain elevated.