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Thursday, January 31, 2019

How Brexit is hittng capital funding, even before we leave

Whatever you say about the impact of Brexit on the economy is dismissed as Project Fear by arch-leavers, who will not accept the disastrous consequences of their campaign until the UK is on its knees, and even then they will blame somebody else.

It is interesting therefore to see this article in the Independent, which quotes the report by a House of Lords committee, suggesting that the UK lost more than €5bn (£4.5bn) in infrastructure funding in a year as lending from the EU collapsed following the Brexit vote.

They say that peers have warned that major infrastructure projects would be hurt further if the government fails to "plug the funding gap" when Britain loses access to the European Investment Bank (EIB) after Brexit, as ministers have relied on the EIB to fund major projects such as Crossrail and Manchester's tram extension.

The Lords EU Financial Affairs Sub-Committee say that Brexit has already had a "material effect" on the UK's relationship with the EIB, which lent €7bn to 54 projects in 2016, compared to €1.8bn to 12 projects in 2017 and €932m to 10 projects last year. In fact, the EIB, has contributed more than €118bn to UK projects in the last 45 years so the vagueness of the UK Government as to the country's future relationship with the body is particularly damaging.

In the last decade alone, the EIB has pumped €50bn into the British economy, and in 2015 accounted for a third of total funding of UK infrastructure projects. That is why it is vital that we have a plan as to how this funding will be replaced after 29th March.
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