Brexit heralds a new era in UK-GCC relations?

You";re landing at New York";s LaGuardia Airport on the 'expressway” approach—it";s called that because you come in low enough to buzz the Grand Central Parkway and Mets";Citi Fieldbefore dropping down quickly on a runway that perchesoverthe middle of a bay.

The UK, a country long beset by political apathy, is in the midst of an economic and political rethink following the end of its 43-year membership of the European Union on 23 June. Will the UK";s phoenix rise from the ashes and if so, what opportunities are on offer for the Gulf?

Brexit could provide a golden opportunity for Gulf Cooperation Council";s (GCC) countries to deepen their economic ties with what is largely considered a respected ally in the West. Brexit means that the GCC";s proposals are no longer subject to the approval of a 28-country trading bloc and new areas of economic opportunity will open up for both the GCC and the UK. Comparatively, negotiating trade deals with the EU can take over six years. Specifically, Gulf countries"; attempt to negotiate Free Trade Agreements (FTA) with the EU since the late 1980";s may finally gain traction with the UK on a bilateral basis. There is significant room for trade growth, as the GCC";s trade with the UK accounted for just 2.7% of the region";s global trade last year, according to ratings agency Moody";s.

Shortly before his appointment as Secretary of State for Brexit under the UK";s new Prime Minister Theresa May, David Davis said the UK should move towards an export-based economy that leverages trade agreements with long-time allies, including the UAE. There is a strong economic foundation on which to bolster UK-UAE trade. Over 5,000 British companies operate in the UAE, which is also an important entry port for the UK";s £150 billion ($197.8bn) regional market, much of which is re-exported to Saudi Arabia and Iran, according to the UK government";s Trade and Investment Office. The UK";s exports to the Gulf include telecommunications, power generation, electronics and transportation.

The World Bank ranks the UAE as the easiest country to do business with in the Middle East, which bodes well in the lead up to the EXPO 2020 in Dubai. The six-month trade show is expected to boost UAE";s economy by $23 billion.

UK-UAE travel relations are also evolving with an updated version of the UK";s electronic visa waiver (EVW) scheme last May, which means Emirati travelers just upload the biographic data page in their passport before travelling. The automated process reduces confusion at border control and charges £15 ($19.7)– considerably cheaper than a UK visa.

Free trade agreements with the Gulf and beyond would be well-timed for the UK";s economy, as British bank Barclays expects a contraction until at least mid-2017. Third quarter economic growth is expected to be -0.2%, followed by -0.3% in the fourth quarter and -0.4% in the first quarter of 2017. Many businesses are shelving their investment plans until the political uncertainty over Brexit has cleared. While hardly dramatic, these numbers are weakening investors"; confidence — the foundation upon which healthy economies are built. The severity of a recession that threatens to strangle the UK";s job and wealth creation will wholly rely on the effectiveness of the economic measures laid out by the Bank of England and the British government over the next quarter. A waiting game ensues.

There are other potential bumps in the UK-GCC";s evolving relationship. A growing appetite for internationally syndicated loans and bonds for sovereigns and companies in the Gulf are often characterized by cheap pricing, which UK banks may not be able to sustain if the economy falls into a deep recession. Gulf borrowers would be safe, however, thanks to their already large and diversified sovereign wealth fund portfolios and lending partners in the US and Japan, and Europe to a lesser degree.

The good news is that the weak Pound sterling enables Gulf investors to widen their footprint of coveted residential and commercial properties in London and the surrounding home counties. Investors from the UAE, Saudi Arabia, Qatar and Kuwait are particularly keen on expanding their UK property portfolio to help diversify their energy-centric economies. Gulf countries"; appetite for economic diversification through foreign assets has correlated to the steep downward trajectory of oil prices. Current Brent prices are hovering at $50 a barrel, which marks more than a 55% drop on June 2014.

The economic volatility following Brexit is likely to encourage the US Federal Reserve to keep interest rates at 0.25% and 0.5% in the short-term in a continued effort to stimulate the economy. Gulf countries already grappling with the bearish impact of low oil prices may breathe a sigh of relief, but rates will likely be affected by the results of the US"; presidential election in November.

For now, Prime Minister May insists she will not begin Article 50 — a process that breaks the UK";s ties with the EU — until all the devolved nations in the country agree. When that might be is still unclear, though early 2017 looks likely. Gulf countries should get their negotiating teams on planes to London quickly, as the UK has already offered a Brexit-free trade deal to Australia and many allies are eager to lock in deals with the world";s fifth

largest economy.

The writer is an energy industry specialist with more than two decades of experience in the global oil and gas markets. He is the founder and managing partner of Gulf Intelligence, a strategic communications consultancy and energy think tank based in the Middle East.