UK businesses see Middle East as prime investment destination as interest in the region doubles

According to the latest research from Pagefield, British businesses are increasingly turning their attention to the Middle East, viewing it as an important investment destination. In recent years, British companies' interest in investing in the Middle East has grown significantly, having doubled.

Over a third (36%) of UK business leaders now see the Middle East as a key investment hub over the next five years, compared to just 18% previously investing in the region. Investors are primarily focused on the region's economic reforms and strategic infrastructure projects, considering these to be key drivers of investment decisions.

At the same time, the UK is seeking to establish closer economic ties with Middle Eastern countries, particularly members of the Gulf Cooperation Council (GCC). Baroness Poppy Gustafsson, the UK's Investment Minister, recently highlighted the ongoing free trade agreement negotiations with the Gulf Cooperation Council, noting that negotiations are progressing rapidly and that both sides are engaged in constructive discussions on goods, services, and sustainable trade provisions.

It is estimated that an agreement between the Gulf Cooperation Council and the UK could increase bilateral trade by 16%, adding $10.85 billion annually to trade between the UK and GCC countries in the long term. Currently, bilateral trade between the UK and the Gulf Cooperation Council is approximately $72.41 billion.

Asia is also emerging as a hotspot, with investment interest in Asia rising from 22% to 32% as British companies seek to strengthen their global market position. British businesses' interest in Asia is also driven by the region's rapid economic growth and evolving trade partnerships.

Christopher Clark, a partner at Pagefield, said: "The sharp increase in interest in the Middle East and Asia indicates a growing need for businesses to access new, high-potential markets. Companies are looking beyond traditional hubs, seeking opportunities in regions that offer economic dynamism and strategic advantages."

Europe remains the top investment destination, with 55% of UK businesses considering it a primary overseas investment location. Investment in the United States remains stable, but new trade tariffs under a Trump administration bring uncertainty that could hinder future deals.

The research highlights a growing need for businesses to see government action to promote UK overseas investment. Despite facing global economic and political headwinds, British businesses remain optimistic about foreign direct investment (FDI), with 91% expressing confidence in cross-border expansion. This puts UK businesses ahead of their US counterparts and has led to greater overseas investment commitments over the past 12 months.

However, as many as 83% of UK businesses say the government must do more to support international expansion, with nearly a third believing that free trade agreements are the most important mechanism. Tax incentives are another key factor, with 19% of UK businesses highlighting the role of enterprise zones and tax breaks in driving investment. Unsurprisingly, economic stability, workforce quality, and a firm commitment to equality, diversity, and inclusion also rank high among investment priorities.

John Alty, Senior Advisor at Pagefield and former Permanent Secretary at the Department for International Trade (DIT), said: "British businesses are ready to invest overseas, but they need the right conditions to do so. The government should be ready to support both outward and inward investment, as this will enhance the strength of British businesses and the British economy. Businesses want the government to facilitate supply chains through free trade agreements and provide domestic support to boost business confidence."