The effort to boost trade between the UK and Israel is expected to benefit the fintech sector.
The UK launched negotiations with Israel for a new, innovation-focused post-Brexit trade deal on 20 July. The deal will aim to create new opportunities for tech firms and professional businesses.
Most of the trade between the UK and Israel focuses on goods, with services accounting for just a third. The new deal could benefit 6,600 UK businesses, including 5,600 small and medium-sized enterprises, employing over 1.7 million people in 2020.
The upgraded new deal is expected to expand a trading relationship that is currently worth £5bn.
Sally Jones, trade strategy partner for EY, said that the deal will particularly benefit the fintech sector as both countries are home to a number of companies in this area.
A recent report from Innovate Finance showed that investment in UK fintech grew by 24 per cent in the first half of the year, reaching $9.1bn (£7.6bn). The country continues to hold its spot as the top European fintech hub.
Meanwhile, Israeli fintech has also been booming. Although cybersecurity is still the leading area of investment in Israel, fintech continues to occupy an important space in the market. In 2021, the fintech sector attracted $4.5bn in capital, according to Viola Group, marking a 136 per cent increase from 2020.
“EY welcomes the intention to upgrade the Free Trade Agreement between the UK and Israel,” said Jones.
“This is an opportunity to put services, digital technology and innovation at the heart of the UK and Israel’s already-strong trading relationship. Both the UK and Israel are known for their vibrant tech and fintech sectors, which will both benefit from this new deal.”
UK managing director at fintech eToro, Daniel Moczulski, also welcomed the start of talks, saying the Tel Aviv-headquartered start-up’s arrival in the UK was a crucial part of its global expansion journey.