Gulf spends petrodollars on home front - FT.com

In years gone by, the calculation was simple: high oil prices meant excess revenues and Gulf states diverting resources that could not be absorbed at home into assets such as US Treasury bills and the London property market.

Now, although high oil revenues are flooding into Gulf states’ coffers and petrodollars are needed in Europe and the US as never before, much of the extra income is being spent locally, analysts say.

Saudi Arabia, the Arab world’s largest economy, is leading the way in state spending with plans to exceed this year’s budget by about 40 per cent. Elsewhere, political unrest has pushed governments including Kuwait, Bahrain and Oman to offer sweeteners to their populations.

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