The European Investment Bank (EIB), which in 2016 financed nearly £7 billion worth of public infrastructure projects in the UK, has decided to put its UK operations on hold due to Brexit.
The decision to halt investment on British building projects was made after Article 50 came into effect last March. Since then, only three projects have received confirmed funding and there has been no financing for new projects since June, leaving the government with a severe shortage of funding for new schools, social housing, and hospitals.
Although the UK is a 16% shareholder in the EIB, the Bank is an EU entity, so Britain will pull out in 2019 unless ongoing membership is settled in the Brexit negotiations. An EIB insider stated that the group has a duty of care concerning projects that mature after that date, so careful due diligence must be exercised given the current circumstances.
According to public sector representatives, the freeze on investment for British building projects could both increase the cost of finance and delay the onset and development of new projects. The EIB is the biggest source of funding for Crossrail, housing association building programmes, and the priority schools building programme.
Housing Finance Corporation chief executive Piers Williamson said he did not expect any investment for British building projects in the near future. Conceding that the EIB had made significant financial contributions towards housing regeneration in Britain for over 20 years, he said that while existing contractual obligations will be met, the corporation will not be able to apply for any more funding at present.