We are open for business, UK tells Gulf investors

The British government is making efforts to reassure the UAE that it is open for business to Gulf investors as trade relations with the European Union turn increasingly sour.

Lord Sassoon says ‘the UK and the UAE have a close relationship but the trade rules and relationship is now the competence of the EU’. Jaime Puebla / The National

The British government is making efforts to reassure the UAE that it is open for business with Arabian Gulf investors as trade relations with the European Union turn increasingly sour.

Lord Sassoon, the commercial secretary to the United Kingdom treasury, said the British government had made "representations" to the EU regarding its trade policies towards GCC states, which will result in the costs of UAE exports to the continent rising from 2014.

"The UK is rightly seen as one of the large economies that is unequivocally open to inward investment," he said.

"The UK and the UAE have a very close historic relationship but the trade rules and relationship is now the competence of the European Union. What we can and are doing is making representations to the EU, but ultimately it will be their decision … What I'm really concentrating on is listening to what investors in the UAE want in the UK so that we remain the preferred destination of choice."

The EU will strike the UAE and other Gulf states from its list of preferred trading partners - intended to reduce tariffs on poor nations - from 2014 onwards.

On Saturday, the Minister of Economy, Sultan Al Mansouri, was quoted by the Wam news agency as saying that the EU should aim to remove trade obstacles with the UAE, raising a risk of future retaliatory action by the Emirates to protect its products.

Mr Al Mansouri cited charges on plastic products, and a carbon tax on airlines which is expected to hit Gulf carriers hard.

Lord Sassoon is on a tour of Gulf states. His trip follows an official visit by British prime minister David Cameron last month during which the British press speculated on a deal to sell 60 Typhoon fighter jets to the UAE.

BP has also been shut out of bidding for the rights to Abu Dhabi oil concessions due for renewal in 2014. Lord Sassoon said he did not discuss the oil company with the UAE Government during his visit.

However, he was keen to stress that the UAE has been a major investor in the UK, with major infrastructure investments including the London Gateway project that DP World is building.

The UAE has also invested into Thames Water alongside a Chinese sovereign investor, which is currently renewing London's Victorian-era sewer system.

Lord Sassoon also said that he had seen little concern among Gulf sovereign wealth funds over their investments in British government debts, also known as gilts.

"People understand that we have a very clear deficit reduction programme that will carry on," he said.

"The best test isn't so much whether the rating is this or that, but the interest rates and spreads."