The United Kingdom is maintaining a strong economic, technological, and research-based relationship with Israel, despite significant political disagreements over the war in Gaza and policies in the West Bank, according to the nation’s envoy to Israel, Simon Walters.
He shared this central message during a Monday morning briefing at the British Embassy in Tel Aviv.
“The UK is not pulling back from its relationships with Israel as a place to do business with, as a center for research, and as a center for tech innovation,” the official said.
This commitment is evident in the robust trade and investment statistics between the two nations.
A flourishing economic partnership
The UK stands as Israel’s fourth-largest trading partner globally and its largest collaborator in Europe. Total trade between the two countries last year was nearly £6 billion.
In terms of foreign direct investment (FDI), the British Business and Trade Department recently ranked Israel among the top eight countries in Europe for per capita investment in the UK.
This year alone, 19 Israeli companies have expanded or launched in the UK, creating nearly 1,000 new jobs. In the last five years, over 300 Israeli companies have established a presence in the UK.
According to the official, the UK offers an attractive package for Israeli businesses, including its language, a manageable two-hour time difference, and substantial tax incentives. The UK’s corporate tax rate is 25%, the lowest in the Group of Seven. The country also offers generous, uncapped R&D tax credits and a special visa for innovators with no minimum investment.
While the economic relationship remains strong, the official was candid about the political differences between the governments.
Negotiations for a new, ambitious free trade agreement were suspended because the British government felt that in the context of the Gaza and West Bank situation, a new deal “would be seen as a reward, perhaps, for policies which we very much disagreed with.” The existing 1995 free trade agreement, however, remains unaffected.
The UK, along with other countries, has also placed sanctions on several individuals and companies involved in the “settler movement.” This is done, in part, as a response to situations where local authorities are perceived as “failing to have taken action.”
On the topic of arms licenses, the British government suspended approximately 10% of permits for weapon systems that could be used in Gaza. The decision was based on a legal process that determined there was a risk of these systems being used in “breaches of international humanitarian law.” This review process is ongoing.
The embassy continues to support several key research programs. The BIRAX program, which has invested £15m. over 13 years, focuses on “healthy aging” research, including cancer and neurodegenerative diseases.
A new call for proposals was launched this month. Similarly, the World Clean Growth Alliance has invested about $1m. in 35 collaborative projects focused on clean energy, water, and food, and has also recently issued a new call for proposals.
Keren Shurkin, the British embassy’s director of the UK Israel Tech Hub, said that the hub’s unique model supports the Israeli “innovation pipeline” from discovery all the way to trade.
The hub works with Israeli tech companies on “tech validation” by creating partnerships with UK institutions. For example, an Israeli company called Cognishine had a successful trial with an NHS partner, which led to multiple trials across the UK.
As for Walters, he said that UK Prime Minister Keir Starmer was personally committed to a “realistic, practical plan for peace.”
The elements of this plan, which the UK is working on with European and Arab partners, include security for Israel and new governance for Gaza without Hamas.
A historic statement from a New York conference, signed by Arab countries, including Saudi Arabia and the United Arab Emirates, called for Israel to be “part of a normalized Middle East” alongside a state of Palestine, with a disarmed Hamas.
The official said that this represents a “huge, huge opportunity for Israel.”
Walters told The Jerusalem Post that UK officials are not playing a role in negotiations to bring the hostages home. Two hostages with ties to the UK, Avinatan Or and murdered Yossi Sharabi, have been held in Gaza since October 7, 2023.
The official acknowledged that while public sentiment in the UK has been affected by images from the enclave, the government’s official policy is to “maintain our relationships with Israeli businesses, universities, and researchers.”
While individual companies, such as the Royal Ballet, may make their own decisions not to engage with Israel, government policy is not to boycott.
Walters reiterated that the UK is committed to a partnership that is an “essential part of what we do.”