---

UK-Israel relations 2026: E1 settlement plan, trade and sanctions

In September 2026, the UK Foreign Secretary, Ed Miliband, said there needed to be a “step change” in the UK Government’s approach towards Israeli settlement construction in the occupied West Bank. He subsequently announced that the UK would amend its sanctions regime to enable the further targeting of settlements and stop UK companies assisting in settlement construction.

The Foreign Secretary said that the UK “should have acted earlier” in taking these steps and it took a “new Prime Minister to come in” to take them.

The government announcement follows the UK’s suspension of some arms export licences for Israel in 2024, sanctions against two Israeli ministers in 2025 (in a personal capacity) and the recognition of a Palestinian state in 2025.

This briefing sets out:

• recent violence and Israeli settlement activity in the West Bank, including the E1 settlement plan, and the UK Government response,
• planned UK restrictions on UK trade with Israeli settlements in the occupied West Bank,
• further UK restrictions on arms exports to Israel,
• the Israeli Government response to the UK measures.

For information on wider UK measures and actions on the Israeli-Palestinian conflict, see the Commons Library collection, Middle East instability in 2023-26. This includes measures against Hamas, a designated terrorist organisation in the UK, UK engagement with the UN Relief and Works Agency for Palestine Refugees (UNRWA) and UK actions in support of the 2025 framework and the Board of Peace.

Israeli settlements and West Bank violence

Israeli settlements in the occupied West Bank, which Israel captured from Jordan in the 1967 Arab-Israeli conflict and referring to Israeli communities established in the area, are one of the seven “permanent status” issues under the Oslo Accords of the 1990s, to be resolved as part of a final settlement on the Israeli-Palestinian conflict.

2016 UN Security Council resolution and settlements 

In 2016, the UN Security Council passed resolution 2334 (2016). This said that the establishment of Israeli settlements in “the Palestinian territory occupied since 1967 [by Israel] […] has no legal validity and constitutes a flagrant violation under international law”. It said Israel must “immediately and completely cease all settlement activities” and no changes to the 1967 lines would be recognised unless agreed by Israeli and Palestinian parties through negotiation.

Under the resolution, the UN Secretary General publishes regular reports on Israeli settlement activity, with the most recent in July 2026. Summarising the report to the UN Security Council, the UN’s Deputy Special Coordinator for the Middle East process said that there had been a “relentless expansion and acceleration of Israeli settlements in the West Bank” and “broader measures aimed at deepening Israeli administrative and territorial control of the West Bank”.

Violence in the West Bank

The same UN Secretary General report said that in 2025 settler-related violence against Palestinians in the occupied West Bank “reach[ed] its highest levels recorded in recent years, with an average of five incidents per day”.

Separate data covering the period from January 2025 to July 2026, published by the UN Office for Coordination of Humanitarian Affairs (UNOCHA), said that in the West Bank 316 Palestinians had been killed by Israeli forces or settlers and 20 Israelis by Palestinians (see the UNOCHA explainer for how fatalities are verified).

What is the “E1” settlement plan?

In August 2025, Israeli Finance Minister Bezalel Smotrich announced that Israel would approve the “E1” settlement plan in the occupied West Bank. The plan is for around 3,000 homes to be built to the east of occupied East Jerusalem.

The UK is among several foreign governments who consider the development as isolating East Jerusalem and severing the northern and southern parts of the West Bank.

Speaking in 2025, Minister Smotrich said that the approval of the E1 plan “buries the idea of a Palestinian state”.

In August 2026, Israel opened tenders for the construction of around 1,200 settlement homes, with the deadline for bids closing before Israel’s parliamentary elections in October.

The E1 plan, first proposed in the 1990s, has long been subject to extensive international criticism, including from the US, EU and UK, though planning has sometimes been resumed in the past.

What has the UK Government said on the E1 plan in 2026?

Speaking in September 2026, the Foreign Secretary said the issuing of E1 tenders in August 2026 was a “red line”. He said the E1 plan would “create[e] a set of facts on the ground to make the two-state solution unviable”. The government has also said that “businesses should not bid for construction tenders for E1 or other settlement developments”.

In August 2026, the government had summoned the Israeli Chargé d’Affaires and “set out the UK’s profound objection” to the E1 plan.

What has the UK Government said on settlers in 2026?

The Foreign Secretary has described “settler terrorism [as] rampant” and that “there is ethnic cleansing of Palestinians in areas of the West Bank - perpetrated by settler terrorists”. He also said that “it is impossible to avoid the conclusion that members of the [Israel Defence Forces] are anything other than complicit in what is happening”.

The description of “settler terrorism” echoes the description by the US ambassador to Israel, Mike Huckabee, who said in September that a “tiny minority” of settlers were carrying out “act[s] of terror”.

New sanctions and expanding the UK sanctions regime

In September 2026, the UK Government announced that its global human rights sanctions regime would be extended to “enable swifter action to deter settlement expansion”. It expects the changes to be brought into force “in the next few weeks”.

The Commons Library briefing, The UK sanctions framework, introduces how the UK sanctions regime operates.

The government also set out further sanctions against settlers alleged to have supported or incited violence against Palestinians, bringing the total number of individuals sanctioned to 38. Earlier sanctions announcements were made most recently in May and June 2026, as well as against two Israeli ministers in 2025, including Mr Smotrich (in a personal capacity), “for inciting violence against Palestinians in the West Bank”.

How has the Israeli Government responded?

Israel has argued the West Bank is “disputed”, not “occupied” territory and its future remains subject to negotiation (for more information, see below).

Speaking in September 2026, the Israeli Foreign Minister, Gideon Sa’ar, said in response to the UK Government statement on the E1 in September 2026 that:

no new decisions have been made regarding development in E1. The decision was taken more than a year ago, and the tender process has been underway for many months. […]

The claims regarding the severing of potential Palestinian territorial contiguity are also baseless. The decision of the government of Israel, taken more than a year ago, stipulated that two roads would be built […]

The Israeli public overwhelmingly supports the communities in Judea and Samaria [the West Bank], and overwhelmingly opposes the establishment of a Palestinian terror state in the heart of our land […]

In September 2026, the Israeli President, Isaac Herzog, addressing a “crime epidemic” in the West Bank, said that “every camp and party” must “fight against this violence”. Israel’s Prime Minister, Benjamin Netanyhu, has said that a “handful of [Israeli] rioters” are “causing a huge injustice to the law-abiding settler public” in the West Bank.

International Court of Justice advisory opinion

In July 2024, the UN’s highest court, the International Court of Justice (ICJ), issued an advisory opinion on a case referred to it by the UN General Assembly in 2022. As an advisory opinion, it is non-binding but can play an important role in influencing actions of other courts.

What did the ICJ say in 2024?

In its non-binding decision (PDF), the ICJ said that “the State of Israel is under an obligation to cease immediately all new settlement activities, and to evacuate all settlers from the Occupied Palestinian Territory” (paragraph 284). It said that, together with other Israeli policies in the West Bank, they amount to annexation:

[...] The Court is of the view that Israel’s policies and practices, including the maintenance and expansion of settlements, the construction of associated infrastructure, including the wall, the exploitation of natural resources, the proclamation of Jerusalem as Israel’s capital, the comprehensive application of Israeli domestic law in East Jerusalem and its extensive application in the West Bank, entrench Israel’s control of the Occupied Palestinian Territory, notably of East Jerusalem and of Area C of the West Bank. These policies and practices are designed to remain in place indefinitely and to create irreversible effects on the ground. Consequently, the Court considers that these policies and practices amount to annexation of large parts of the Occupied Palestinian Territory (paragraph 173)

[...] the policies and practices adopted by Israel in East Jerusalem and the West Bank, is contrary to the prohibition of the use of force in international relations and its corollary principle of the non-acquisition of territory by force (paragraph 179)

The advisory opinion (PDF) also reemphasised the court’s earlier opinion in 2004 that “Israel’s settlement policy was in breach of the sixth paragraph of Article 49 of the Fourth Geneva Convention”, which provides that “[t]he Occupying Power shall not deport or transfer parts of its own civilian population into the territory it occupies” (paragraph 115).

In addition, the advisory opinion (PDF) said that states should “abstain from entering into economic or trade dealings with Israel […] which may entrench its unlawful presence in the territory”:

[states are under a “duty”] to abstain from entering into economic or trade dealings with Israel concerning the Occupied Palestinian Territory or parts thereof which may entrench its unlawful presence in the territory; to abstain, in the establishment and maintenance of diplomatic missions in Israel, from any recognition of its illegal presence in the Occupied Palestinian Territory; and to take steps to prevent trade or investment relations that assist in the maintenance of the illegal situation created by Israel in the Occupied Palestinian Territory (paragraph 278)

As the ICJ website notes, advisory opinions have “no binding force” but can “carry great legal weight and moral authority”. Legal scholars note ICJ opinions can have wider “legal impact” such as through their interpretation of binding conventions, defining legal obligations or on other aspects of international law.

What did the UK say on the 2024 case in September 2026?

Since the ICJ opinion was issued in 2024, the UK Government said that it was considering it “carefully” as the opinion was “quite far reaching, with some novel elements”.

In September 2026, the Foreign Secretary said that the UK Government’s official view was that Israeli occupation was “unlawful”:

the British Government have rightly said that settlements are illegal, but we have remained silent on the question of the legality of the occupation as a whole, which in 2024 the International Court of Justice concluded was unlawful.

Today, I announce that the official view of the British Government is that the occupation is unlawful, because of Israel’s entrenchment of its control, its intention to extend permanent sovereignty and its expansionist agenda via illegal settlements. […]

The Foreign Secretary said the government’s view on the unlawfulness of the occupation “should be reflected in the economic relationships we choose to have with the occupied territories”. These measures are set out below.

What has Israel said on the 2024 ICJ case?

Israel has argued against the characterisation of the Occupied Palestinian Territories as “occupied”, arguing that because there was no recognised sovereign state governing them their time of their capture in 1967, they should be considered as “disputed” territories.

It opposed the ICJ advisory opinion in 2024, and said that “deep historical ties and [our] own valid claims to the territory in question are [...] discounted” in it, and “both interested parties [the Israeli Government and Palestine Liberation Organization] have given their express and binding consent to resolving that dispute [detailed in the Oslo Accords] through another settlement” (PDF). 

The Israeli Foreign Office had also said that the West Bank was a topic for negotiation and argued the Oslo Accords did not preclude settlement building. It said these were instead an issue for permanent status negotiations.

New UK Government measures on trade and Israeli response

In September 2026, the UK announced it would be amending its sanctions regime to address UK companies providing goods and services supporting Israeli settlements in the occupied West Bank. The legislation is intended to be in place within six to nine months.

The Israeli government announced four countermeasures in response, including closing the UK consulate in Jerusalem.

What is the state of UK-Israel trade?

As set out in the Commons Library briefing, UK trade with Israeli settlements in the Occupied Palestinian Territories (8 July 2026), the UK has a free trade agreement with Israel, under which goods produced “in a location within the territories brought under Israeli administration since June 1967” (referring to (beyond “green line” Israel, or the “1967 lines”) are not entitled to beneficial tariff treatment.

Both the Commons Foreign Affairs Committee and many Labour MPs have called for the government to take further action to ban trade from Israeli settlements in the Occupied West Bank. In response to a parliamentary debate in July 2026, the government said it was considering further measures to “stop UK businesses providing economic support and legitimacy to illegal settlements”.

What did the government announce in September 2026?

Citing the government’s response to the ICJ advisory opinion (see above), in September 2026 the Foreign Secretary said the UK would introduce an import ban on goods from illegal settlements in the Occupied Palestinian Territories (beyond “green line” Israel, or the “1967 lines”) and on services provided for settlement expansion.

France and Canada have said they will implement similar measures, as some European states already have and others have committed to do.

Mr Miliband said that to do this, the government would introduce a “new comprehensive sanctions regime […] with appropriate religious exemptions”.

UK sanctions legislation is made under the Sanctions and Anti-Money Laundering Act 2018. The act provides a broad set of powers in Schedule 1 to enact sanctions regimes that include trade sanctions on goods and services.

The Foreign Secretary said trade with Israel will continue to be supported.

What are the government’s plans for the legislation?

The government is planning for the legislation to be in place within six to nine months.

The Foreign Secretary’s announcement said the new regime will take action against specific companies and individuals who “provide services such as construction, infrastructure, financing, or real estate for settlement expansion”. He was also asked in the Commons if the measure would apply geographically (such as to an area or targeted at individuals), to which he responded that the import ban would apply based on geographical area:

Will it be geographic? It will be in relation to the import ban. It will be focused on the settlements in the occupied territories, and we will absolutely ensure that it does not hit green-line Israel.

The government has also said that “settlement postcodes will be identified and appropriate checks will be put in place to verify compliance” when trading with Israel.

The Foreign Secretary said that it will be the responsibility of UK business and businesses importing into the UK to ensure imported goods are correctly distinguished. HM Revenue and Customs, the Office of Trade Sanctions Implementation and the Office of Financial Sanctions Implementation, will be involved in monitoring and compliance action. Further guidance will be published alongside any future legislation.  

The government will also ban the advertising of illegal settlements in the UK (in June 2026, a number of MPs had raised concerns about an event in London).

When Foreign Secretary, in July 2026 Yvette Cooper had set out some of the challenges of restricting the trade in services and noted the integration of Palestinian and Israeli economies:

For the settlements, there is obviously an issue about not wanting to have an impact on Palestinian businesses in the occupied territories, and not wanting to have an impact on legitimate Israeli businesses in green line Israel that have never had any engagement with the settlements and that may have had all sorts of trading relationships. [...]

In terms of where other countries [taking action on trade] have got to, because that is worth reflecting on, most other countries have focused on goods and goods only. Services is more complex. If we want to look at things like advertising bans and things like that, that is more complicated. […]

We would rather not have to do this through primary legislation, because that is a very complex route […] It just takes a long time […] What we are looking at is what the options would be in terms of using secondary legislation, including using effectively the statutory instruments on the existing sanctions regime processes.

What was the response in the UK Parliament?

In the House of Commons, the shadow Foreign Secretary, Tom Tugendhat, said that while the official opposition also considered illegal settlements to be “wrong” and that groups of settlers had committed “outrageous abuses”, the government’s actions will “harm innocents”, as the Israeli and Palestinian economies are “too interconnected”. He said there was also a risk of “encouraging sectarianism and antisemitism at home” in the UK.

The Foreign Affairs Committee Chair, Emily Thornberry, said the government’s action on settlements was “right” but she was “concerned” about the six to nine months it will take to implement.

The Liberal Democrat Foreign Affairs spokesperson Calum Miller said the measure was “long overdue” and welcomed the inclusion of services in the restrictions.

What was the response among Jewish groups in the UK?

The Board of Deputies of British Jews said it followed the September announcement with “deep regret” and warned that deteriorating UK-Israel relations have the potential to “further inflame community tensions” in the UK.

Following a meeting with the Foreign Secretary in August, the Board said that the government would be taking its concerns “into account […] in its decision making” on the “measures relating to settlements”.

Other Jewish groups, such as Yachad, have described the UK Government's action on trade as “necessary” and drawing a “clear distinction” between Israel and Israeli settlements.

The Commons held a debate in Westminster Hall on the safety of Jewish communities in the UK on 8 September 2026. The Policing and Crime Minister, Sarah Jones, told MPs that the government does “not intend to shy away from the huge challenge that we all face” on antisemitism.  Recent government measures have included new funding to protect Jewish communities, announced in July 2026.

What measures has Israel announced in response?

The Israeli Foreign Minister, Gideon Sa’ar, described the UK actions in September as “anti-Israel” and the “accusations” made by the UK Foreign Secretary as “outrageous lies”.

The Israeli President, Isaac Herzog, said that “sanctions are not a solution – dialogue is” and the actions represented a “gross interference in the democratic elections” of Israel (parliamentary elections will be held in October).

The UK Government has said the timing reflects the rise in settler violence and forthcoming closure of E1 tenders.

The Israeli Foreign Minister announced four actions in response to the UK:

1. Closing the UK’s consulate in Jerusalem, within 30 days. The consulate represents the UK in Jerusalem, the West Bank and Gaza and provides consular assistance in the same areas (see below for the announcement in October 2026). The UK will retain its embassy in Tel Aviv.
2. Removing UK representatives from the International Gaza Support Center (previously known as the Civil-Military Coordination Center, being established to monitor the 2025 Israel-Hamas framework).
3. Ending UK training for the Palestinian Authority police in the West Bank through the British Support Team in Ramallah (the Telegraph newspaper also reports they monitor settler violence in the West Bank)
4. Denying entry to 11 MPs and one UK national “involved in antisemitic and anti-Israel activity, as well as those who deny the very existence of the State of Israel”. The MPs include former Leader of the Opposition, Jeremy Corbyn MP, and former Green Party co-leaders Carla Denyer MP and Adrian Ramsay MP.

What was agreed for the UK consulate in October?

The UK Government says it considers East Jerusalem to be occupied territory, and that Israel does not have the right to close it. On 8 October, it said that, following discussions with the Israeli Government, the consulate building will now be known as “UK Mission, Jerusalem”. The government said that some UK staff have been temporarily withdrawn for their safety and security, and it “will work in the coming months to build back up our presence”.

The Foreign Secretary, Ed Miliband, said that the UK will “not take reciprocal action while […] discussions are underway and credible”.

Israel’s Foreign Minister, Gideon Sa’ar, said that “the [UK] consulate is ending its operations” and 20 diplomats, including the Consul General, are to leave. He said that a staff of seven diplomats is to remain to conduct “very limited” activity. The Foreign Minister also said that dialogue would continue.

What did Palestinian and Arab leaders say?

The Palestinian Authority President, Mahmoud Abbas, welcomed the UK announcement as a “step in the right direction” and said it should be accompanied by further steps against “settlement expansion, […] colonists’ [Israeli settler] crimes, and [to] ensure accountability”.

The Arab League’s secretary general similarly called for further steps (the League is a collection of Arab states).

Eight states, including Saudi Arabia, Turkey, Jordan and the United Arab Emirates, issued a joint statement welcoming the UK trade restrictions.

How did the US respond?

The US Secretary of State, Marco Rubio, said that the US “share[s] the goal of stability” in the West Bank with the UK and “at this moment, we don’t have any further comment”.

How are UK arms exports being restricted?

From 2024, the UK has banned some arms export licences to Israel, citing a risk they might be used to violate international humanitarian law. In 2026, it said it would now restrict arms that “materially contribute to the [Israeli] occupation”.

2024 suspension of some licences

In September 2024, following a review of UK arms exports, the then Foreign Secretary, David Lammy, announced that the UK would suspend around 30 licences, out of about 350, to Israel. He said that “for certain exports” the government had concluded there was a “clear risk” they “might be used to commit or facilitate a serious violation of international humanitarian law”.

He said the UK remained committed to supporting Israel’s right to self-defence. For more information on the decision, see the Commons Library briefing, UK arms exports to Israel, January 2025.

The UK Government most recently published data on arms export licences to Israel in 2026, covering the period to February. It said there were then 203 non-suspended extant military licences to Israel and 192 for non-military goods.

In September 2025, the then Middle East Minister, Hamish Falconer, had also said that “all licences for exports to the Israeli Defence Forces are kept under careful ongoing review to ensure they are not being used for military operations in Gaza or the West Bank”.

2026 extension of licence restrictions

In September 2026, the Foreign Secretary said the licence measures would be extended to “refuse all licence applications for arms and other exports that materially contribute to the [Israeli] occupation”.

He said the ban on these exports “will now remain in place for as long as the [Israeli] occupation persists”. In September, the government said that "we have already suspended licences for equipment that might be used by the IDF in Gaza" and no additional licences have been revoked:

No additional licences have been revoked or suspended since 8 September 2026. This is largely because licences for items that might materially contribute to the occupation have already been suspended because of Israel’s conduct in the Gaza conflict. We now have in effect an additional lock on relevant licences.

Further reading

E1 plan and trade measures

• Chatham House, Banning UK trade with illegal Israeli settlements is long overdue, September 2026
• International Crisis Group, Israeliactors should face a choice: Building in E1 or business with Europe, September 2026
• The Conversation, UK plan to sanction Israel’s illegal West Bank settlements is a historic shift in tone andpolicy, September 2026

Hamas and the Occupied Palestinian Territories in 2026

The UK Government has continued to call for the implementation of the 20-point plan for Gaza, agreed by the Trump administration and endorsed by the UN Security Council in November 2025. This includes Hamas, which the UK has proscribed as a terrorist organisation, disarming and no longer governing Gaza (among other provisions).

For information on the plan, see the Commons Library briefing Gaza 2026: Board of Peace and National Transitional Committee.

In August 2026, in a statement welcomed by the United States and UK Government, Hamas agreed to a plan that includes the phased surrender of its weapons. Israel initially rejected the plan, but later said it would engage on disarmament talks.

Among the issues are the timing of disarmament and Israeli withdrawal. Analysis for the Chatham House thinktank in August argued “it is unlikely that a timeline for decommissioning weapons or drawing down [Israeli] troops [in Gaza] will be agreed anytime soon”.

To verify the disarmament process and replace Hamas’ security forces, under the 20-point plan the establishment of an International Stabilisation Force for Gaza is required and the Palestinian National Committee would have to be allowed into Gaza (it is currently in Egypt). Both bodies are established under the 2025 framework, and separate to the Palestinian Authority in the West Bank.