Prime minister David Cameron has said that leaving the European Union (EU) and the subsequent loss of European Investment Bank (EIB) funding will “put the brakes” on crucial UK infrastructure projects.
Cameron warned that a vote to leave the EU would result in the UK giving up billions of pounds of infrastructure investment every year. He also said that an exit from the EU would terminate Britain’s membership of the EIB, an organisation which has invested more than £16bn in UK projects over the past three years.
Just over a week ago the EIB announced funding of £280M for the expansion of facilities at University College London and earlier this week it confirmed a £700M injection of finance for the Thames Tideway Tunnel, a major new sewer which will help clean up the River Thames. The government said that these were just the latest of many projects, covering every region of the UK, which had been supported by the bank.
Cameron said that Treasury analysis had already highlighted Britain would be worse off by £4,300 a year per household if the public voted to leave the EU. However, the statement released by the PM is the first time government has warned of the significant impact of walking away from the EIB.
“We know leaving the EU would result in an economic shock in the UK, after which we would be permanently poorer,” said Cameron. We also know businesses would lose access to the single market of over 500M 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.”
He said that vital projects across every region of the UK had been financed by the EIB and that these made a huge difference locally, nationally, and sometimes globally – including the purchase of 65 new Super Express Trains for the East Coast Main Line; investment in development of emission control technologies in Hertfordshire; the extension of the M8 motorway between Edinburgh and Glasgow; and 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,” he said.
“Infrastructure affects the competitiveness of every business and the prosperity of every family in the country – but a leave vote on 23 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 €7.77bn (£6.12bn), representing 11.2% of its overall lending to EU countries.
In 2015, the UK was also one of 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 £360M investment in the smart meter roll-out by British Gas.