The U.K. plans to ban imports from Israeli settlements in the occupied West Bank and prohibit British companies from providing services to businesses operating there.
The measures would target goods produced in settlements, which the U.K. and much of the international community regard as illegal under international law.
British officials have framed the policy as a response to settlement expansion and its impact on prospects for a negotiated Israeli-Palestinian peace.
Israel has rejected the move and threatened retaliation, including the possible closure of the British consulate in Jerusalem.
The consulate provides services to Palestinians and plays a key role in Britain’s diplomatic engagement in the West Bank and Gaza, making any closure a potentially significant escalation.
The dispute comes amid heightened international pressure over Israel’s policies in the occupied territories and growing divisions among Western governments over how to respond.