How Europe-UAE Economic Growth is Unlocking Big Opportunities for European SMEs

Photo by Kevin Villaruz

Europe-UAE Economic Ties

Europe-UAE economic ties create new opportunities for European Small and Medium Enterprises (SMEs) in the United Arab Emirates. The collaboration between the European Union (EU) and the UAE continues to strengthen economic relations, driven by strategic partnerships, trade agreements, and the creation of investment opportunities for SMEs. The EU remains the second-largest global trade partner of the UAE, with non-oil trade reaching €62.5 billion in 2024, marking a 3.6% increase from 2023 and a rise of 18.1% from 2022. Likewise, the EU’s contribution to the total non-oil foreign trade of the UAE now accounts for 8.3%. Within the EU, Germany is the UAE’s second-largest trading partner with non-oil trade reaching €12.8 billion in 2024, an increase of 5.4% from 2023.

Furthermore, the ongoing trade discussions between Europe and the UAE, including Comprehensive Economic Partnership Agreements (CEPA), are paving the way for a more seamless business environment. Adding to the CEPA, the EU and UAE began fresh discussions about a Free Trade Agreement to combat Donald Trump’s new tariff policies.

The UAE’s strategic position serves as a gateway to the Middle East, Africa and and South Asia, offering attractive incentives to European SMEs to expand in the Gulf region. In addition, free zones like Dubai International Financial Center (DIFC) and the recently announced first of its kind sports and entertainment free zone by the Dubai World Trade Centre (DWTC) offer 100% foreign ownership, simplified immigration, tax benefits, and fast and easy business setup in Dubai for European businesses looking to expand in the UAE.

EU and UAE to Begin Free Trade Agreement Talks

According to the EU official website, President von der Leyen held a constructive phone conversation with the UAE’s President, Sheikh Mohamed bin Zayed Al Nahyan, to initiate negotiations on the EU-UAE free trade agreement. This development represents a significant step forward in EU–UAE relations and, alongside broader Strategic Partnership Agreements, has the potential to strengthen ties between the EU and the Gulf Cooperation Council (GCC).

Future Outlook – European SMEs in the UAE

Thanks to the government-led initiatives, the future looks promising for European SMEs to expand in the UAE. These initiatives include supporting foreign investments, innovation, sustainability, and digital transformation. Recently, Italy and the UAE finalized a $40 billion agreement to strengthen economic ties to reinforce their strategic partnership. The investment plan between Italy and the UAE aims to bolster the Italian economic landscape and solidify its role in industries like artificial intelligence, energy, and telecommunications. 

Likewise, a recently conducted survey by Arton Capital ranked the UAE seventh out of the top 10 destinations where German millionaires plan to relocate in 2025. The study surveyed 1,000 German millionaires aged 18-70 having a net worth of €1-5 million in assets. The decision to relocate to the UAE was based on the country’s safety, security, zero income tax, and high returns in the real estate sector. According to the Global Safety Index by Numbeo, the UAE is considered the world’s safest country as it surpassed Hong Kong, Singapore, and Japan.

Europe and the UAE

Earlier this month, a delegation from the UAE visited Brussels to enhance economic ties and foster investment opportunities between the EU and the UAE. Both sides explored opportunities to collaborate on key sectors like advanced manufacturing, e-commerce, and healthcare. Notably, industries like artificial intelligence, fintech, and clean energy present immense growth opportunities as the UAE focuses on diversifying its economy and advancing the non-oil sector. An IMF forecast indicates that the UAE economy will grow by 4%, while the ICAEW Economic Insight report predicts that the UAE GDP will expand by 4.8% in 2025. 

European SMEs eyeing international expansion should consider Dubai and the UAE. A thriving business landscape, supported by higher consumer disposable income, investor-friendly policies, access to high-growth sectors, and strong economic cooperation, makes the UAE a frontrunner. Similarly, the UAE’s commitment to innovation and sustainability further cements its position as an attractive market for European businesses in the coming years.

Internationalisation of European SMEs

With a strategic presence in both Germany and the UAE, we assist European SMEs in expanding successfully in Dubai and the UAE. Get in touch to discover how our tailored market entry strategies, in-depth insights, and business planning can support your expansion journey.