Whitehall officials were angered by King Abdullah’s claims in a BBC interview before the visit that London ignored warnings from Riyadh that could have prevented the terrorist attacks on London in 2005 that left 52 people dead. During the visit, many in the Saudi delegation were angered by attacks in the UK press on the kingdom’s record on human rights and terrorism.

‘Why are they saying these things about us?’ says one senior member of the Majlis al-Shura (Consultative Council). ‘We have suffered more than anybody from terrorism.’But while diplomatic gains were limited, much was achieved to improve economic ties. One key initiative was signed on 30 October when the two states agreed to establish a joint investment company that will operate across both countries.

Saudi-British business ties have declined since their peak in the 1980s. UK exports to Saudi Arabia in 2006 were worth an estimated£4,500 million, making Saudi Arabia the UK’s 23rd largest export market. And with investments of about $15,000 million, the UK is the second largest investor in Saudi Arabia after the US. An estimated 25,000 UK expatriates live and work in Saudi Arabia. However, these figures are down from about £5,500 million of UK exports in 1997 and about 70,000 UK expatriates in the kingdom in the mid-1980s.

‘There was a dip in business between the two countries,’ says Khalid al-Seif, chairman of Saudi Arabia’s Committee for International Trade and president of the Riyadh-based El-Seif Group. ‘But business relations have improved and we are seeing a major increase in the volumes of trade between the two kingdoms. I expect UK exports to Saudi Arabia to double in the next three years.’Al-Seif says the latest oil boom and the opening up of the Saudi economy are creating significant opportunities for UK businesses in Saudi Arabia.’The new boom is about building capacity in the kingdom,’ he says. ‘There is a clear role for UK companies in helping to deliver hi-tech and privatisation projects, such as in the telecoms, water, power and desalination sectors. But the UK could do more. I think it does not understand the potential.

‘Al-Seif says business relations have suffered from a lack of understanding in the UK about the kingdom. ‘There have been a lot of misconceptions about the war on terror that kept Saudi off the radar for UK businesses,’ he says.

As the Saudi chair of the Saudi British Joint Business Council, Al-Seif was one of the two signatories of the agreement to establish the Saudi British Investment Company, the other being his UK counterpart, Baroness Symons.

The structure of the new investment company should be agreed by early 2008. Its aim will be to promote the involvement of UK companies in Saudi Arabia.

UK and Saudi investors will each hold 50 per cent of the company, which will initially be a closed joint-stock company with a capitalisation of $589 million (SR 2,200 million). At some stage, about 25 per cent of the company will be offered to the public in London and Riyadh.A similar scheme, the Saudi German Development & Investment Company (Sageco), was established in 1981 to encourage joint investments in Saudi Arabia by Saudi and German companies, particularly in the industrial, agricultural and service sectors.

Sageco says it has carried out more than 145 studies for German and Saudi investors, which have led to 20 companies being set up. However, not everyone is impressed. Mubarak al-Khafrah, chairman of the National Industrialisation Company (Tasnee), says its results have been disappointing. Al-Khafrah, who is also involved in the Japan-Sa