Announcement builds on the £44 billion of guarantees and other types of financing support that the government already offers to help UK businesses and projects get off the ground.
The Chancellor, Rt Hon George Osborne MP, has announced that the government will team up with the European Investment Bank (EIB) to help provide more support to SMEs and infrastructure projects, ensuring that they get the financing they need to create jobs and boost the UK economy.
By working closely with the EIB and European Investment Fund (EIF) the government will ensure that as many UK projects and SMEs as possible are able to access financing from the European Fund for Strategic Investment (EFSI).
The UK aims to build on its already impressive strong track record of successfully securing EIB and EIF financing:
- The EIB lent a record €7 billion in the UK in 2014: an increase of 20% compared to 2013, which itself was a 56% increase 2012
- The EIF has supported 25,000 UK SMEs
The EFSI, which forms one pillar of the EU Commission Investment Plan for Europe and was confirmed by European leaders last month, will use public funds, in this case €8 billion of the EU Budget, to leverage private sector investment in infrastructure and SMEs across the EU.
It will target current market failures by addressing market gaps and mobilise up to €315 billion of private investment to the EU economy over the next three years. It is a good example of how the government’s efforts to reform the EU and improve its economic competitiveness are already making a difference.
The Chancellor announced that alongside the EIB the UK government will make £6 billion of UK guarantees available to co-finance EFSI infrastructure projects in the UK; and that the UK has stepped up its bilateral engagement with EIB, and will shortly sign a Memorandum of Understanding with the EIB to ensure that we are well placed to maximise the benefits of the EFSI and wider EIB financing opportunities for the UK.
He also announced that the British Business Bank is forging closer links with the EIF to ensure that they are well placed to work together to finance UK SMEs; the British Business Bank is signing a Memorandum of Understanding with the EIF, a key element of which will see both organisations collaborate on support for potential high growth SMEs.
The Chancellor said:
The UK is determined to make the most of the European Fund for Strategic Investment, which will see EU funds being spent in a way that will promote growth and create jobs in the UK and across Europe.
A key part of the government’s long term plan is to ensure that infrastructure projects and SMEs across the UK have access to the necessary finance.
Today’s announcement which will see us join up with the European Investment Bank brings us one step closer to making this happen.
Vice-President Katainen said:
I am delighted that the UK has announced £6 billion – nearly €8.5 billion - of co-financing for the European Fund for Strategic Investments (EFSI) projects. This is the biggest announcement yet and will have a big impact on SMEs and infrastructure in the UK. The Investment Plan for Europe is moving into high gear.
British Business Bank CEO, Keith Morgan, said:
We are pleased to be signing this important Memorandum of Understanding with the European Investment Fund. This will enable us to strengthen our relationship with the EIF, bringing opportunities for closer collaboration in supporting the growth of smaller businesses and the UK economy as a whole.
European Investment Bank Vice President, Jonathan Taylor said:
The new and now operational EFSI initiative provides an opportunity for the European Investment Bank to strengthen support for long term investment in a number of sectors across the UK. Last year was a record year for the EIB in the UK with £6 billion of EIB loans backing more than £18 billion of investment. EFSI will build on our strong track record supporting world class transport, energy, water, education and innovation investment.
EIF CEO, Pier Luigi Gilibert said:
I am convinced that the Memorandum of Understanding which we are signing today will serve to further our cooperation with the British Business Bank.
It reflects our joint effort to support small- and medium-sized companies which are an important driver for growth and jobs in the UK as well as across Europe. In addition, this agreement is a good example of our intention to strengthen the cooperation with national promotional institutions across Europe.