Out-Law / Your Daily Need-To-Know

UK announces £6 billion in guarantees for EIB-backed infrastructure projects

22 Jul 2015, 2:30 pm

UK chancellor George Osborne has announced that the British government will make £6 billion available for UK-based infrastructure projects jointly financed with the European Investment Bank (EIB).

The UK government will work with the EIB and the European Investment Fund (EIF) to help UK projects and small and medium sized companies (SMEs) access to financing from the European Fund for Strategic Investment (EFSI), the chancellor said in a statement.

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 on 2012, the chancellor said. The EIF has supported 25,000 UK SMEs, the statement said.

The EFSI is part of the Juncker plan, named after European Commission president Jean-Claude Juncker. This aims to establish a European Fund for Strategic Investments (EFSI) made up of €5bn capital from the European Investment Bank (EIB) and a €16bn guarantee fund. The guarantee fund is to receive €8bn from the EU budget, out of which the EIB may be paid in the event of a call on the guarantee.

The EFSI "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 said.

The UK's £6 billion in funding will co-finance these projects with the EIB, he said.

The UK has increased its work with the EIB and will soon sign a memorandum of understanding with the bank "to ensure we are well placed to maximise the benefits of the EFSI and wider EIB financing opportunities for the UK," the statement said.

"The UK is determined to make the most of the [EFSI], which will see EU funds being spent in a way that will promote growth and create jobs in the UK and across Europe," the chancellor said in the statement.

"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 [EIB] brings us one step closer to making this happen" he said.