UK infrastructure bank may be needed to replace EIB funding post-Brexit
31 January 2019
The EU Financial Affairs Sub-Committee today publishes its report on Brexit: the European Investment Bank, which calls for the Government to consider establishing a UK infrastructure bank, ahead of the UK leaving the European Union.
Since joining the EU in 1973 the UK's infrastructure has been the beneficiary of more than €118 billion of lending from the European Investment Bank (EIB). The UK will lose access to the EIB after Brexit and the Government should consult on establishing a UK infrastructure bank. This should be explored within the Government's infrastructure finance review and, depending on the outcome of this review, be part of its National Infrastructure Strategy.
There has already been a marked decline in funding from the EIB since the referendum and triggering of Article 50. Despite this, and the fact that the UK will lose access to the EIB after Brexit, the Government has said little about any future relationship with the EIB or possible domestic alternatives.
Commenting on the report, Baroness Falkner of Margravine, Chair of the EU Financial Affairs Sub-Committee, said:
"For the last 45 years the UK has relied on the European Investment Bank to invest in all manner of vital infrastructure projects such as Crossrail, London’s ‘Super Sewer', the expansion of Manchester’s tram network and Scotland’s Beatrice offshore windfarm.
"The UK’s infrastructure, and the industries that depend on infrastructure spending, will be hurt if the Government does not quickly find a way of plugging the funding gap that will be created if access to the EIB is lost after Brexit.
"We're calling on the Government to give serious and swift consideration to the creation of a UK infrastructure bank. It also needs to come clean about why it has not claimed any share of the EIB's profits, which for the UK could amount to €7.6 billion."
Some of the key findings from the report are:
- Losing access to the EIB could lead to a significant funding gap, especially for large-scale infrastructure projects. The decline in EIB (87 per cent) and EIF (91 per cent) funding since the referendum and the triggering of Article 50 is striking.
- With so little time left until Brexit, the lack of any meaningful proposals on a future relationship with the EIB or domestic alternatives is disappointing.
- The Government should give serious consideration to the creation of a UK national infrastructure bank. This could fill the gap left by loss of access to the EIB and support the financing of key UK infrastructure after Brexit and into the future.
- The Government failed to provide a satisfactory explanation of its negotiation position on the return of the UK’s capital. As a profitable business, there seems to be a plausible case that the UK should receive some share of that profit. A 16.1 percent share of the EIB's retained earnings would be €7.6 billion, almost 20 percent of the UK’s financial settlement of £35–39 billion.
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