The Foreign and Commonwealth Office (FCO) is to announce the closure of its full consulate in Iraq's second city, Basra, the BBC has learned.
The FCO will keep an office in Basra in southern Iraq but there will be no permanent staffing.
The decision has reportedly been condemned by British business leaders with investments in the area, who have claimed that Britain risks losing major infrastructure projects as a result of the move.
Baroness Nicholson, chairwoman of the all-party parliamentary group for Economic Development in Iraq and the Region, explained that she hope that this is "a step sideways and not a step backwards".
"I regret the announcement that is coming out today," she added and argued that "the British business presence in Basra is absolutely critical."
Andrew Alderson, who managed Basra's finances in the immediate aftermath of the invasion, was also critical of the move: "This does not appear to be part of a coherent plan," he said.
"If you are not prepared to stay the course and win the peace then don't put the troops into harm's way."
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