The party in Riyadh is winding down. Saudi Arabia's petrodollar-fuelled shopping list, once a lifeline for British luxury brands, property developers, and defence contractors, is shrinking. The kingdom's oil revenues are faltering. OPEC+ production cuts and a global shift towards green energy are squeezing the cash flow that underwrote the Vision 2030 spending binge.
Whitehall sources confirm that Saudi Arabia's Public Investment Fund (PIF) is quietly scaling back its overseas acquisitions. The message to UK investors is clear: don't put all your eggs in one desert basket.
The numbers tell the story. Saudi oil revenues fell by nearly a quarter in the last quarter year-on-year. The kingdom needs an oil price above $80 a barrel to balance its budget. Brent crude is hovering around $75. The fiscal arithmetic is unforgiving.
For British firms, the fallout is already tangible. The iconic London listings of Saudi-backed entities like the Savoy Hotel and the £300 million stake in Aston Martin look less glamorous now. The PIF's £1 billion investment in Newcastle United, a trophy asset, is unlikely to be repeated soon.
The Treasury is wary. They remember the 2015-16 oil crash when Saudi mega-projects were frozen. The current slowdown feels different. This time, the kingdom is trying to pivot to tourism and tech, but the transition is painful. The $500 billion NEOM mega-city is still a desert.
Westminster's backroom chatter is fixated on diversification. Defence contractors like BAE Systems, which depend on Saudi orders for the Typhoon fighter jet, are eyeing other markets. The luxury retail sector, which rode the wave of Saudi tourists in London's Knightsbridge, is nervous.
A Whitehall insider put it bluntly: 'The Saudi liquidity tap is turning off. British investors who tied their fortunes to the royal family's whims need to wake up and smell the crude.'
The risk for the UK government is double-edged. Politically, the relationship with Saudi Arabia is a diplomatic tool. Economically, it has been a cash cow. If the cow stops producing, Downing Street loses both leverage and revenue.
The City of London is already recalibrating. The dream of 'Saudi money washes everything' is fading. The new reality is that British exports to the kingdom, from arms to architecture, will face stiffer competition from China and Russia.
Polling data from YouGov shows British public confidence in Saudi investments is waning. The Khashoggi scandal never fully faded. Now, with money drying up, the moral calculus might simply become an economic one.
The Cabinet is divided. The Foreign Office wants to maintain the alliance. The Treasury is worried about the trade deficit. The Prime Minister's team is watching the opinion polls.
The punchline is this: Saudi Arabia's spending spree was a product of cheap oil and expensive visions. The vision is becoming a mirage. British investors should look elsewhere. The Gulf is not an ATM anymore.
