The whispers in the City are getting louder. Saudi Arabia’s petrodollar-fuelled spending spree is hitting turbulence. UK finance houses, once eager to park cash in Riyadh’s Vision 2030 projects, are now quietly reassessing.
The trigger? A stark warning from Saudi finance minister Mohammed Al-Jadaan. ‘We will be fiscally conservative,’ he said. Translation: the taps are tightening. The kingdom’s budget deficit is projected to hit 2.3% of GDP this year. Non-oil growth is slowing. And with oil prices wobbling, the era of ‘money no object’ is ending.
Whitehall sources tell me UK export credit agencies are reviewing guarantees for infrastructure deals. One senior banker, speaking on condition of anonymity, said: ‘We are looking at the risk-reward profile of Saudi exposure. The froth is coming off.’
The shift matters. London’s financial district has been one of the biggest beneficiaries of Saudi capital. The Public Investment Fund (PIF) has splashed cash on everything from Newcastle United to luxury hotels. But now, PIF is being told to rein in spending and focus on domestic priorities.
Backbench MPs are already circling. Labour’s Treasury select committee has called for ‘transparency’ on UK-linked Saudi investments. The noise is growing.
For UK finance houses, the calculus is simple: lower oil prices mean less Saudi liquidity. ‘Saudi Arabia is still a big story,’ said a fund manager. ‘But the free-spending days are done. We are marking down expectations.’
Downing Street remains diplomatic. A spokesperson insisted the relationship is ‘strong’. But in the Lobby, the mood is cautious. The Saudi spending spree has reached the end of the line. And the City is taking notes.
