Major infrastructure projects could be hurt further if the government fails to address the potential loss of access to the European Investment Bank (EIB) after Brexit, says a new report.
The House of Lords EU Committee’s Brexit: the European Investment Bank report echoes concerns raised by ICE about future funding of infrastructure projects.
The new report finds that “losing access to the EIB would almost certainly increase the cost of capital in different sectors of the UK economy and could mean that some future projects would no longer be commercially viable”.
It also suggests there’s a need for a new model of financing, such as a UK Investment Bank.
In its State of the Nation: Infrastructure Investment report, ICE called on government to explore the feasibility of establishing a UK Investment Bank, as a contingency against the loss of access to low-cost finance after Britain’s exit from the EU.
Chris Richards, ICE Head of Policy and Public Affairs, said: “It is critical that the government identifies and consults on potential failures in the UK infrastructure market in case access to European Investment Bank finance is lost.”
Between 2012 and 2016, the UK economy received over €30bn from the EIB, but investment in 2017 fell by 72% based on previous levels, so ICE welcomed this further call for action by the House of Lords EU Select Committee.
“We set out the case for the consideration of a UK Investment Bank, or similar entity, in our 2018 State of the Nation report, recognising the important role that the EIB plays as an anchor investor in innovative projects that may struggle to attract interest from other institutional investors if this access is lost,” Richards said.
He added that the government should consult on the future of the UK’s relationship with the EIB as soon as possible.