31 Oct 2019

The UK-Israel trade corridor

The UK-Israel trade corridor: how the UK and Israel could benefit from a closer trading relationship – written by Bank Leumi (UK) plc


“Trade ties between the UK and Israel are stronger than ever. Indeed, with Israel cementing its position as a global leader in a number of hi-tech industries, and the UK a critical global hub for financial services, the two countries have a lot to offer each other. At Leumi UK, we aim to play a key role in strengthening this unique relationship –– laying the groundwork for local and international businesses to thrive in the UK and Israeli markets.” Gil Karni, CEO, Leumi UK.


While the UK prepares for its formal exit from the European Union (EU), establishing lasting, meaningful trading relationships has become a key priority for the UK Government. As the first country to sign a bilateral trade agreement with the UK, Israel represents an exciting opportunity for a number of key industries – and strengthening this relationship will give the UK access to one of the world’s most innovative markets.

Indeed, the UK-Israel bilateral trading relationship is one of the strongest for both countries, underpinned by solid political, legal and regulatory ties. Since its declaration of independence in 1948, the UK has been a leading supporter and important political ally to Israel. Yet over recent years the two countries have established an even closer relationship, with government initiatives such as the December 2017 aviation agreement – ensuring travel between the UK and Israel will remain open after Brexit – demonstrating the importance of maintaining this partnership. With common law legal systems, low levels of state corruption and measures in place to protect investors, the two countries have a relationship that is hard to replicate – allowing for business partnerships that can help young companies expand overseas.

Increasing trade

Certainly, levels of bilateral trade between the two countries have continued to increase – notably hitting a record-breaking £8 billion in 2018 and heading towards the £9 billion mark for 2019 – covering everything from tahini to hi-tech. Indeed, 2016 saw the signing of the biggest ever trade deal between the two countries, with Rolls Royce agreeing to provide £1 billion worth of engines for El Al’s new planes. What’s more, Israel’s largest investment house, Psagot, is now owned by a UK private equity firm.

Yet it is in the technology space that trade is really booming. Established in the British Embassy in Tel Aviv in 2011, the UK-Israel Tech Hub is driving trade in this industry and, according to the June 2018 UK-Israel Tech Hub impact report, has already generated an estimated £85 million worth of deals from 175 tech partnerships since its inception. By enabling leading Israeli start-ups to establish a foothold in the UK market, British companies have been given access to Israel’s world-leading innovations, and is understood to have boosted the UK economy by an estimated £800 million.

The start-up nation

This success is largely down to the investment and support behind Israel’s start-up businesses. Local start-ups raised an estimated US$6.47 billion in 2018, and – with the highest concentration of such companies per capita in the world – Israel has been dubbed the “start-up” nation. In this space, hi-tech is an area in which Israel is thriving – with Tel Aviv’s “Silicon Wadi” producing pioneering new technologies with excellent potential for integration in the UK market.

Israel is recognised as a world leader in research and development (R&D), with the highest gross domestic expenditure on R&D as a percentage of GDP in the world. As one of the first countries to significantly invest in Israel’s R&D industry, the UK has a particularly significant relationship with the country. With the second highest number of R&D centres in Israel in the world, the pairing of Israeli technology and innovation with British investment has the potential to provide an important synergistic boost in both countries and can fuel the technological advancement of key sectors in the UK.

Digital health, for instance, is gaining importance in the healthcare sector and is vital to the future of the life sciences industry. With 100% electronic medical records and an innovative approach in areas such as machine learning and medical imaging, Israel is a pioneer in the med-tech space – boasting more than 1,000 start-ups. Through the UK-Israel Dangoor Initiative, the NHS – the world’s largest healthcare provider – will gain access to Israel’s latest developments, in turn ensuring the UK remains at the forefront of the healthcare revolution as well as giving Israeli start-ups exposure to such a large market.

But it’s not just in med-tech where a UK-Israel partnership is leading the way. Ed-tech initiatives such as the UK-Israel Task Force could see the UK and Israel work together to lead an industry in need of further digitalisation. Meanwhile, pioneering solar thermal power technology could address gaps in the UK’s clean energy market. And, as the battle to advance blockchain to the point of widespread, cross-industry use continues to be an international preoccupation, collaboration with Israel – which has made blockchain a prime focus of innovation – could give the UK an important boost in this space.

But this is far from a one-way street. The UK is the world’s leading international financial and professional services centre, generating an industry trade surplus of US$107 billion, of which US$88 billion was in financial services alone. Its financial clout in terms of capital-raising, together with a young workforce keen to invest in cutting-edge ideas, means London is a natural next step for Israeli start-ups looking to expand internationally. What’s more, London’s own ‘Silicon Roundabout’ represents one of the world’s biggest and fastest growing tech sectors, with a celebrated start-up culture that is securing increasing investment. Given Israel’s strength in this space, this presents an excellent opportunity for collaboration and integration with Israel’s brightest minds.

Naturally, Leumi UK hopes to play an important role in taking this relationship to the next step, with a key focus being placed on the hi-tech space in the coming months. Through its Residency & Networking Programme, it has committed to helping Israeli start-ups integrate in the UK market by offering businesses access to its extensive network of contacts and fully-wired offices. Whatever the outcome of Brexit, Leumi UK will remain at the forefront of the growth in bilateral trade that underpins the unique relationship between the two countries.

For more information on the UK-Israel trade corridor, please click here to read Leumi UK’s whitepaper