The United Arab Emirates (UAE) is warning Andy Burnham that it will pull billions of pounds of investment out of the UK in retaliation for the guilty verdict against Manchester City.
The diplomatic row represents a major test of Mr Burnham’s premiership and raises questions over why the Prime Minister praised Manchester City’s ownership in an intervention days earlier.
Mr Burnham, the former mayor of Greater Manchester, initially said he would be “really concerned” if the UAE decided to sell the football club after the club was found guilty of financial irregularities by the Premier League.
He was later forced into a climbdown, with Downing Street insisting no team was “above the rules”.
The Telegraph understands that the UAE is threatening to pull the plug on billions of pounds the Government was seeking in private investment for a hi-tech hub between Oxford and Cambridge, billed as the UK’s answer to Silicon Valley.
It has emerged that Khaldoon Al Mubarak, the football club’s chairman, met Jonathan Reynolds, the Business Secretary, in Downing Street a fortnight before the Premier League announced it had found City guilty of breaking the rules.
The Department for Business and Trade insisted the two men did not discuss Manchester City but instead focused on trade, defence and security. Mr Mubarak knew City had been found guilty at the time of the meeting, although the details had not yet been made public.
Details of the meeting have been kept secret, but Emirati officials have separately warned the UK Government that billions of pounds of future investment could now be withdrawn because of the scandal surrounding City.
On Friday night, Downing Street said it did not dispute reports that the decision to find City guilty had “undermined” the UAE’s “appetite for future grand-scale UK commitments”.
Bloomberg said UAE officials were claiming “the Premier League’s actions” would “have an influence on the bilateral state relationship”.
Billions of pounds of investment
Documents show two senior Labour ministers had courted the UAE in seeking billions of pounds of investment in the scheme to build the hi-tech “corridor” between Oxford and Cambridge.
Ministers invited Mr Mubarak’s “partners to visit our Oxford-Cambridge Corridor project”, a letter written on Feb 10 and obtained by The Telegraph under a freedom of information request showed.
Official documents show that Lord Stockwood, then a senior minister, had discussed the Oxford-Cambridge project at a meeting hosted by Mr Mubarak in Abu Dhabi in February.
Mr Mubarak, as well as being chairman of Manchester City, is also the chief executive of Mubadala, one of the UAE’s sovereign wealth funds which has almost £300bn of assets under its management.
“Across life sciences, infrastructure and technologies, there are clear synergies across our strategies,” Lord Stockwood wrote in a letter inviting Mubadala officials to visit the Oxford-Cambridge scheme.
Lord Stockwood, a former chairman of Grimsby Town football club, invited Mr Mubarak to visit the team’s home ground.
Lord Stockwood, who stepped down as a minister in July following the change of prime minister, declined to comment on claims that Abu Dhabi investment was at risk as a result of the Manchester City scandal.
Reports suggest that in the past five years the UAE has poured more than £30bn into major UK sectors, including defence, life sciences and technology. However, the fallout threatens to derail future deals at a time when the Government is desperate for foreign investment to revive the economy.
Rachel Reeves, the former chancellor, had claimed the development of the Oxford-Cambridge corridor could inject £78bn to the UK economy by 2035. The Government has pledged £500m to kickstart the scheme but is seeking £10bn in private investment to get it off the ground. Abu Dhabi is being seen as key to that investment.
The Premier League judgment delivered earlier this week against Manchester City has dealt a major blow to relations. City were found guilty of all but one of 115 charges brought against it.
The club was found to have artificially inflated its financial results by more than £900m to circumvent strict rules on clubs’ spending. Potential punishments include a points deduction, heavy fines or possible expulsion from the Premier League.
Cash from Gulf powered Burnham’s Manchester
Manchester City’s ultimate owner is Sheikh Mansour bin Zayed Al Nahyan, the brother of the UAE’s president, explaining why the finding against City is so damaging to bilateral relations and why the matter is so sensitive.
The crisis is all the more problematic for Mr Burnham, because of his close connections to Manchester, where he was mayor until the summer.
In further minutes of meetings held in February in the UAE between Lord Stockwood and senior Abu Dhabi leadership, the Labour minister stressed the importance of both the Oxford-Cambridge corridor and the Northern Growth Corridor, a multi-billion development that includes a multi-billion pound upgrade of rail services between Liverpool, Manchester and east to the North Sea.
In the minutes dated Feb 5 this year and which were also obtained by The Telegraph under FoI laws, Lord Stockton promoted the UK’s “unique capabilities” in areas such as research and design and its plans for AI growth. Lord Stockwood met with Sheikh Hamad bin Zayed Al Nahyan, known as HbZ, who runs the Abu Dhabi Investment Authority, another of the UAE’s sovereign wealth funds with about £900bn of assets under management.
Lord Stockwood separately met Mr Khaldoon to discuss investments through Mubadala, another of the sovereign wealth funds. “JS [Lord Stockwood] noted he wanted to start a conversation, to work both ways on mutual ambitions on investment. JS noted this government is supportive of wealth creation and pro-growth,” noted the minutes. They went on: “JS noted Ox-Cam, and the Northern Growth Corridor to combine the different capabilities of the mayoralties. Investment is one part of this, but knowledge transfer too,” stated the minutes of their meeting.
The minutes show Mr Khaldoon specifically boasted of Abu Dhabi’s investment in Manchester and the transformation of the city. “KaM noted they are very proud of what they have achieved through their investments in Manchester,” the minutes read.
Mr Burnham’s intervention in the row between Manchester City and the Premier League prompted widespread condemnation, but may be explained by the pressure being put on the Government by Abu Dhabi.
In 2024, the Government blocked an attempted takeover of The Telegraph by RedBird IMI, an Abu Dhabi-backed consortium.
The Gulf state has also been credited with the revival of Manchester through huge investment in business and housing projects, which in turn provided a platform for Mr Burnham to launch his bid to replace Sir Keir Starmer in No 10.
Mr Burnham told the BBC on Wednesday: “I would be really concerned to lose them [as owners of Manchester City]. They’ve been such a huge partner in the building of modern Manchester. Obviously, the building of Manchester City into the global force that it is.”
He added: “I can’t intervene more in the process,” suggesting he might have already tried to intervene, a claim that has been denied. He then appeared to row back, saying: “I am not getting directly involved in the process.”
Downing Street was then forced to issue a statement stressing that “the initial judgment [against City] is serious and there can’t be any suggestion that anyone is above the rules”.
The statement concluded: “If wrongdoing is established, those responsible should face the appropriate consequences.” That statement was subsequently altered to replace the word “if” with “wherever”.
The Premier League has found Manchester City guilty of arranging “sham contracts” to disguise payments. City have said they will appeal the Premier League’s findings.
