A vote to leave the European Union will result in the UK giving up billions of pounds of infrastructure investment every year, the Prime Minister warned today.
An exit from the EU would terminate Britain’s membership of the European Investment Bank (EIB), an organisation which has invested more than £16 billion in UK projects over the past 3 years.
Just over a week ago the EIB announced funding of £280 million for the expansion of facilities at University College London and just yesterday it confirmed a £700 million injection of finance for the Thames Tideway Tunnel, a major new sewer which will help clean up the River Thames. Those are just the latest of many projects, covering every region of the UK, which have been supported by the bank.
While Treasury analysis has already highlighted Britain will be worse off by £4,300 a year per household if Britain votes to leave the European Union, today is the first time the government has warned of the significant effects of walking away from the EIB.
Prime Minister David Cameron said:
We know leaving the EU would result in an economic shock in the UK, after which we would be permanently poorer. We also know businesses would lose access to the single market of over 500 million people, and the contraction of our economy would mean less money for public services.
But something less remarked upon is the devastating impact on future infrastructure investment of our expulsion from the European Investment Bank.
Vital projects across every region of the UK have been financed by the EIB. These make a huge difference locally, nationally, and sometimes globally – from the purchase of 65 new Super Express Trains for the East Coast Main Line; to investment in development of emission control technologies in Hertfordshire; to extension of the M8 motorway between Edinburgh and Glasgow; to the expansion of Oxford University’s research and teaching facilities.
Not only would leaving the EU see us wave goodbye to this crucial funding – but, with a smaller economy hit by new trading barriers and job losses, it’s unlikely we’d be able to find that money from alternative sources.
Infrastructure affects the competitiveness of every business and the prosperity of every family in the country – but a leave vote on 23rd June risks putting the brakes on the infrastructure investment we need and shifting our economy into reverse.
The EIB operates outside of the EU budget and is financially autonomous. The UK – its joint-largest shareholder – is a significant beneficiary. The bank offers long-term investment loans to EU member states on favourable terms and its mission is to support economic growth across Europe.
The UK has more than doubled the volume of investment it receives from the EIB since 2012, and in 2015 EIB lending in the UK totalled a record €7.77 billion, representing 11.2% of its overall lending to EU countries.
In 2015, the UK was also one or the largest beneficiaries of the EIB’s new special investment facility, the European Fund for Strategic Investments (EFSI), and received the largest single EFSI-backed loan, a £360 million investment in the smart meter roll-out by British Gas.
Notes to editors
The EIB is owned by and represents the interests of the European Union member states. As the largest multilateral borrower and lender by volume, it provides finance and expertise for sound and sustainable investment projects. More than 90% of its activity is focused on Europe but it also supports the EU’s external and development policies.
The European Fund for Strategic Investments (EFSI) was set up in 2015 and aims to unlock €315 billion of additional investment across the EU. The UK supported its creation and it is a good example of the movement towards a more innovative use of the EU budget, boosting investment in the real economy.