Article: http://www.bbc.com/news/uk-politics-41774817
The UK has 3.5bn euros of capital in the European Investment Bank (EIB) which could be worth 10.1bn euros considering reserves and profits. However, Alexander Stubb, the vice president of the bank, said UK's investment won't be fully repaid until 2054.
All 28 EU nations are shareholders in this Luxembourg-based bank, with the UK being one of the largest with 16% next to Germany, France and Italy. The EIB uses capital given by the EU countries to provide loans at low rates which are mostly used for major infrastructure projects.
There has been talks about how there are delays in authorizing new loans while the UK remains part of the EU. For example, a housing association, Stonewater, has reported that it may build roughly 300 fewer homes because their application for 100m pounds to build new properties has come to a halt. Apparently Stonewater's executive director said that the bank has to wait for assurances from the UK government before their application can continue. It is not clear what these assurances are, but it most likely has to do with the UK wanting it's taxpayer's money payed back to them.
If housing associations are having to limit the amount of homes they can build, one might wonder what other infrastructure related projects are being hurt by this? Since the UK's money could be tied up for decades, would this problem also persist for decades? It will be interesting to see what will happen to the EIB's ability to loan out funds as time progresses.
This will be very interesting as many believe that the so-called "Brexit Bill" will be a very important part of the negotiations especially as President Juncker is emphasizing the high amounts of money that will be owed to the EU from great britian. This may help to offset the costs of that bill.
ReplyDeleteThe repayment projection date of 2054 seems long, especially since the UK has so much investment in this particular bank, being on of the larger clients one would expect the return payments to be higher priority. Obviously the investment is a large one to pay back at that. In regards to housing, the UK Brexit aspect of this issue poses a very large threat to the future of the infrastructure.
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