Documents considered by the Committee on 12 September 2018 Contents

19InvestEU Programme 2021–27

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Energy & Industrial Strategy and Treasury Committees

Document details

Proposal for a Regulation establishing the InvestEU Programme

Legal base

Articles 173 and 175 TFEU, ordinary legislative procedure; QMV

Department

Treasury

Document Number

(39888), 9980/18 + ADD1–6, COM(18) 439

Summary and Committee’s conclusions

19.1Much of the EU budget, which in 2018 amounts to €160 billion, is spent on direct financial support via programmes like the Common Agricultural Policy or the Framework Programme for Research. However, the Union also operates a system of ‘financial instruments’. These essentially encourage financial institutions, in particular the European Investment Bank, to provide more capital for investments likely to contribute to EU policy objectives (for example by boosting employment or mitigating the effects of climate change). It does so by allowing those investments to be guaranteed against the EU budget, partially indemnifying the investor if the project does not yield the desired (financial) results.

19.2At present, the EU’s use of financial instruments is fragmented: the applicable rules are set out in sectoral policy programmes, like Horizon 2020 (the EU’s current Framework Programme for Research) or the Cohesion Fund Regulations. However, as part of the negotiations on the EU’s next Multiannual Financial Framework, the Union’s expenditure limits in broad policy areas for 2021–2027, underpinned by various sectoral funding programmes the European Commission has proposed to amalgamate the existing ‘financial instrument’ provisions into a single instrument (InvestEU). The total EU Guarantee to back up such instruments would be €38 billion over the 2021–2027 period, of which 40 per cent—€15.2 billion—would be set aside as provisioning capital to reflect the riskiness of the investments that would be supported.

19.3The UK is due to leave the EU formally on 29 March 2019 and fully by the end of a transitional period in December 2020.223 As such, it would not be part of the InvestEU programme, as it is due to become operational in early 2021.224 The proposed legal framework does allow for ‘third countries’ to contribute towards the EU Guarantee, and therefore become eligible for investment from the Programme guaranteed against the EU budget. In her Explanatory Memorandum on the proposal, the Chief Secretary to the Treasury (Elizabeth Truss) told us that the UK “supports the principle of simplifying the requirements and processes” for EU financial instruments, but has yet to decide whether the Government would seek ‘third country’ participation in InvestEU after Brexit.

Conclusions

19.4As we set out in more detail in ‘Background’ below, the potential value of UK participation in the InvestEU Programme as a non-EU country will depend on the outcome of the negotiations on its legal framework, and how any participation agreement could secure a fair level of investment into the UK in return for its financial contribution to the Guarantee. We will keep our assessment of these matters under review as the legislative deliberations between the European Parliament and the Council on the new Programme progress in Brussels.

19.5The scope for UK participation may also be linked to the wider relationship between the UK and the European Investment Bank, the main ‘implementing partner’ for InvestEU, after Brexit. While the Government has said it wants a continuing arrangement” with the Bank,225 the EIB’s Statutes limit the scale of support it can offer to the UK as a ‘third country’, and the Treasury has not set out any detailed proposals for what this new ‘arrangement’ might look like. The EIB has been an important source of capital for large UK infrastructure projects since 1973, but its activities are—by law—focussed primarily on EU Member States. The Bank’s lending to the UK has already dropped sharply since the referendum, from €7 billion in 2016 to €2.1 billion last year.226

19.6In anticipation of further information from the Minister about the negotiations on the InvestEU Regulation, and ultimately the decision on whether or not the UK will seek to participate as a ‘third country’, we have retained the proposal under scrutiny. We also ask the Minister to write to us by 1 October 2018 to clarify what “continuing arrangement” the Government envisages between the UK and the EIB after Brexit, and whether any of the Bank’s functions are to be taken over by a domestic replacement.

19.7We have also drawn the proposal to the attention of the Business, Energy & Industrial Strategy and Treasury Committees, given its potential implications for access to capital for UK businesses if the Government decided to seek participation in the InvestEU Programme.

Full details of the documents

Proposal for a Regulation establishing the InvestEU Programme: (39888), 9980/18 + ADDs 1–6, COM(18) 439.

Background

19.8The EU has used ‘financial instruments’ since the 1970s, to encourage other parties to provide financing for investment projects which support the EU’s policies (but without the EU budget providing direct support itself).227 Financial instruments typically take the form of debt, loan guarantees or equity provided by those third parties, guaranteed against the EU budget (which would partially meet the costs of any failed investment). This allows the EU budget to be leveraged to provide increased levels of private sector investment, especially in situations where lenders or investors would be unwilling to take the risk by themselves.

19.9The Union’s backing for financial instruments has proliferated in recent years. Under the current Multiannual Financial Framework (MFF), the EU’s budgetary cycle from 2014 until end 2020, there are 16 such instruments managed centrally by the European Commission.228 They are embedded in funding programmes in different policy areas, including the Framework Programme for Research (Horizon 2020),229 the COSME programme for small businesses, and the Connecting Europe Facility for investment in transport and energy infrastructure.230 In many cases, the financial instruments are aimed primarily at increasing access to capital for small European businesses in the field covered by the sectoral programme.231 Member States can also issue financial instruments backed by the EU budget using their funding allocation under the European Structural & Investment Funds,232 which are managed by each EU country separately (see paragraphs 0.22 to 0.24 below).

European Fund for Strategic Investments

19.10In addition to the existing sectoral financial instruments, the European Commission also launched a dedicated Investment Plan for Europe as one of its first acts in late 2014 in response to the adverse effects of the financial crisis on investment levels in Europe. The Plan’s central policy was a European Fund for Strategic Investments (EFSI), a joint initiative between the Commission and the European Investment Bank.

19.11The Fund, with a €26 billion guarantee,233 uses financial instruments to mobilise investments—in particular from the private sector- across the EU’s Member States by 2020. It became operational in summer 2015, and has a target of leveraging €500 billion by the end of 2020.234 To qualify for support from the EFSI, a project must normally be focused on “smart, sustainable and inclusive growth, quality job creation, [or] economic, social and territorial cohesion”. This has created a degree of overlap with the provision of financial instruments from other EU programmes (see above).235 Alongside the EFSI, the EU also established the Investment Advisory Hub (EIAH)—which provides technical assistance to private and public entities seeking investment—as well as the European Investment Project Portal (EIPP), an online platform which connects project promoters and potential investors.

19.12The Strategic Investments Fund is currently on track to meet its target of leveraging €500 billion in investments by the end of 2020, having reached 66 per cent of that target— €315 billion—by late 2017.236 Under the programme, the EIB has approved 7 projects in the UK, as well as having signed a further sixteen.237 These include funding for new rolling stock for the East Anglia train franchise and the construction of a wind farm in the Thames estuary. After the UK leaves the EU, British projects will by default become ineligible for support from the Fund.238

19.13An independent evaluation of the EFSI, published in June 2018, concluded that the EU guarantee was an “efficient way of increasing the volume of riskier operations”, but highlighted the need to “strengthen synergies with other EU funding programmes”. The evaluation also found that, while EFSI funding provided by the EIB had a higher level of risk compared to its normal operations,239 further efforts should be made to reinforce its ‘additionality’ (i.e. ensure that investments made using financial instruments backed up by the Fund would not have been made otherwise).

The Commission proposal for InvestEU

19.14Given the persistent investment gap in Europe, especially in the fields of research, infrastructure and skills,240 the European Commission in June 2017 suggested that the function fulfilled by the EFSI should be carried over under the EU’s next Multiannual Financial Framework (which runs from 2021 to 2027), and also incorporating the various sectoral financial instruments used by the EU into a single instrument.

19.15On 6 June 2018, the Commission tabled a formal legislative proposal to keep the EFSI in place until the end of 2027, and amalgamate it with many of the EU’s other sectoral provisions on financial instruments into a single investment support mechanism: InvestEU.241 The aim is to eliminate the current complex and fragmented set of rules governing EU financial instruments, for example by standardising reporting requirements. Accordingly, the proposals for sectoral funding programmes under the next MFF contain no substantive sections on financial instruments (as they do now), but instead refer back to the new InvestEU Regulation.

19.16The core of the InvestEU Programme would be the EU Guarantee, which would back financial instruments—such as equity, loans or guarantees—made available by designated ‘implementing partners’ for eligible investment projects.242 The most important partner would be European Investment Bank. The Guarantee means the EU would provide a partial reimbursement for any costs incurred by implementing partners in respect of failed investments for which use of the Guarantee was approved. The Commission estimates the InvestEU Fund could trigger more than €650 billion (£588 billion) in additional investment across the EU over the 7-year period between 2021 and 2027.

19.17The Commission has also proposed an ‘InvestEU Advisory Hub’, which will integrate the EU’s existing technical assistance facilities for investment into a “one-stop-shop for project development assistance”. It will provide technical support and assistance to help with the preparation, development, structuring and implementation of projects. The existing Investment Project Portal, where investors and projects can be matched up, would also remain in place. The Commission estimates the total cost of the Hub and Portal at €525 million (£472 million) over the 2021–27 budgetary period.

Investment priorities under the InvestEU Programme

19.18The InvestEU Programme’s overall objective is to support the policy objectives of the EU, by mobilising public and private investment to promote sustainability, competitiveness and inclusive growth. The Commission has proposed that the initial size of the Guarantee should be €38 billion (£34.3 billion). This would be, in effect, the maximum share of the EU budget that could theoretically be used to compensate implementing partners for unsuccessful investments backed by the Guarantee. Of this, €15.2 billion (£13.8 billion)—a substantial 40 per cent—would have to be set aside as provisioning capital to reflect “the riskiness of the portfolios” envisaged.

19.19The €38 billion would be used only for use of the Guarantee in the “EU compartment”, which is focused on “market failures or sub-optimal investment situations related to Union policy priorities and addressed at the Union level”. This means it would provide backing for investment in four “policy windows” covering areas of EU activity which typically have a strong cross-border or trans-national element—like the Framework Programme for Research (Horizon Europe), the Connecting Europe Facility for infrastructure, or the LIFE Environment Programme. The different ‘policy windows’ and their indicative share of the EU Guarantee are shown below, as well as the related sectoral EU funding programmes under the 2021–2027 MFF which they are designed to complement.

Policy window

Related EU programmes 2021–2027

Share of the EU Guarantee for investment related to programmes under direct EU management

Sustainable infrastructure

Connecting Europe Facility, LIFE Environment Programme, ETS Innovation Fund

€11.5 billion (30%)

Research, innovation and digitalisation

Horizon Europe, European Defence Fund, Digital Europe, EU Space Programme

€11.25 billion (29.6%)

Small- and medium-sized enterprises

Single Market Programme,243 Horizon Europe, Creative Europe

€11.25 billion (29.6%)

Social investment and skills

Creative Europe, European Pillar of Social Rights244

€3.9 billion (10.3%)

19.20More details on the specific priorities that would fall within these ‘windows’ is set out in the annex to the proposed Regulation. This includes, for example, investment in the renewable energy, tourism and defence industries, as well as funding actions that align with the new European Pillar of Social Rights (such as the social housing projects or improving accessibility of public spaces for people with disabilities).243244

19.21The use of the EU Guarantee for specific investment projects would be subject to approval by an Investment Committee, which would meet in four different configurations depending on the ‘policy window’ in which the project falls. In each configuration, the Committee would be composed of six independent (paid) experts. The Commission has proposed that Member State supervision of the activities of InvestEU would be limited: an Advisory Board, where all EU countries would be represented, would allow Members States to receive information about implementation of the InvestEU Fund and “exchange views with [them] on market developments and share best practices”.

‘Member State’ compartments

19.22The €38 billion guarantee would cover only the four “policy windows” listed above. In addition, there would also be a “Member State compartment” to InvestEU. Effectively, this means EU countries would have the option of using the Guarantee to create financial instruments with the funding they were allocated under the European Structural & Investment Funds (ESIFs). These include major areas of EU expenditure, like the Cohesion Fund or the Agricultural Fund for Rural Development, which are under ‘shared management’: although regulated by EU law, implementation—including awarding of funding—is the responsibility of individual Member States.

19.23At present, EU countries already have the option to use part of their ‘shared management’ funding to act as a guarantee against financial instruments, with the aim of increasing the overall levels of investment by crowding in private sector capital rather than providing a pure public sector grant. The amount of EU funding to be delivered via financial instruments under the ESIFs is set to be €21 billion by the end of 2020.245 Under the InvestEU proposal, use of financial instruments to achieve the objectives of the ESIFs would be backed by the centralised EU Guarantee within one of the four ‘policy windows’, rather than covered by programme-specific rules. This, the Commission argues, would lead to a “major simplification compared to the current situation since only one set of rules will apply” if Member States make use of this option.

19.24Where a Member State chooses to make use of InvestEU for part of their ESIFs allocation, they have to make a financial contribution to the provisioning capital set aside by the EU to cover the possibility of the EU Guarantee being called on. The Guarantee itself would then also be increased in size above the €38 billion for financial instruments related to the “EU compartment” (see above).

Possibility of UK participation in InvestEU

19.25The UK is due to leave the EU formally on 29 March 2019 and fully by the end of a transitional period in December 2020.246 As such, it would not be part of the InvestEU programme, as it is due to become operational in early 2021.247 However, the Regulation as proposed by the Commission foresees the possibility for participation by non-EU countries, requiring a specific legal agreement between the EU and the ‘third country’ involved, as well as a financial contribution ‘topping up’ the EU Guarantee. In return, the European Investment Bank and other ‘implementing partners’ would be able to provide loans, equity or guarantees for projects in that country, backed by the Guarantee and therefore—in principle—lowering the cost of accessing capital.

19.26The Chief Secretary’s Explanatory Memorandum on the proposed Programme reiterates that “the UK will want to continue working with the EU in ways that promote the long-term economic development of our continent”, including by taking part in “those specific policies and programmes which are greatly to the UK and the EU’s joint advantage”. However, she does not indicate whether the Government is actively considering becoming a participation in the Programme, noting only that the UK “may have an interest” in EU programmes that “promote science, education and culture” the Government “will take into account the potential interaction of these with financial instruments” under InvestEU.

Our assessment

19.27The InvestEU Programme will significantly alter the way the EU provides guarantees for investment in a wide range of policy areas. While it is in principle open to UK participation after Brexit, the added value of such involvement is not yet clear. This is because the Programme’s legal framework is yet to be formally established, and the Government is still constructing its detailed position on post-Brexit involvement in EU funding programmes and, where necessary, their domestic replacements.248

19.28In terms of the substance of the proposal, we understand that most Member States are largely positive about the thrust of the Regulation and the Commission’s efforts to create a consistent set of rules for the use of financial instruments related to both direct and shared management programmes. However, given the uncertainty about the UK’s future participation—and the fact it will have far less influence if it were to be a ‘third country’ participant than as a Member State—we do believe the substance of the Regulation deserves further consideration in the following areas:

19.29We will keep these matters under review when we consider updates from the Government about progress in the legislative process, especially in view of the possibility the UK may seek to participate in the InvestEU programme.

Implications of Brexit

19.30We have also considered the implications of Brexit for UK businesses’ access to capital more broadly, in the context of the InvestEU proposal and the UK’s departure as a part-owner of the European Investment Bank.

19.31While the UK can seek to duplicate the funding lost from EU programmes if participation under the next Multiannual Financial Framework is not sought (or secured), this is easier for EU funds under ‘shared management’ where financial support is managed domestically and mostly channelled into national projects. Therefore, the ‘Member State compartment’ of the InvestEU Programme, which focuses on financial instruments under EU programmes under ‘shared management’ such as the Common Agricultural Policy, is likely to be replaced by domestic alternatives.250 Whether financial instruments will form part of the UK’s domestic toolkit for these post-Brexit funding programmes is not yet clear.

19.32However, for ‘Union policies’—where EU funding or investment via financial instruments is typically focussed on transnational cooperative projects in areas like research or energy infrastructure, the situation post-Brexit is more difficult. The UK cannot unilaterally replicate the benefits and scale efficiencies of being involved in cross-border initiatives that take place within the framework of EU law, and with the backing of the EU budget. As such, the Government has recognised that continued UK in participation in specific EU programmes beyond Brexit can be in the national interest. The possibility of such participation, and the conditions attached to it, will vary on a programme-by-programme basis. This would, invariably, require a contribution to the EU budget (‘pay to play’).

19.33As we noted in our Report on the Multiannual Financial Framework of 4 July 2018, UK participation in EU funding and investment programmes will not always be possible. In the case of InvestEU, the proposed legal framework does explicitly provide for that possibility; however, the Government is yet to decide whether that is an option it wishes to pursue. That is sensible given that the Regulation is still subject to amendment by the Council and the European Parliament. It is also unclear how the Government could ensure that its contribution to the EU Guarantee would translate into a fair share of financial instruments to back investment projects in the UK.

19.34In any event, if the UK leaves the EU without a Withdrawal Agreement—a possibility which the Secretary of State for International Trade recently said was more likely than not251 —there will be no legal settlement governing the financial obligations the Government has recognised the UK has vis-à-vis the EU budget. In those circumstances, it is hard to envisage a situation where the remaining Member States would be open to UK participation in any EU programmes as a ‘third country’, until the question of outstanding financial commitments had been resolved. We therefore consider that any UK participation in EU funding programmes or structures—which could be “greatly to the UK and the EU’s joint advantage”—will require a settlement of the ‘Brexit bill’ one way or another, irrespective of whether it happens via the Withdrawal Agreement prior to 30 March 2019, or subsequently.

19.35The decision on the UK’s participation in InvestEU may also be linked to the Government’s wider approach to its future relationship with the European Investment Bank, the main implementing partner for the EU’s financial instruments. As required by its Statutes, the EIB’s activities are focused primarily on supporting economic growth in EU Member States.252 The draft Withdrawal Agreement provides for the gradual return of the UK’s paid-in capital with the Bank (€3.5 billion) over a period of 12 years, although the UK would remain liable to cover a part of any contingent liabilities arising in relation to EIB investments made before its EU membership ceases on 29 March 2019.253

19.36While the UK would be technically considered a ‘Member State’ for the duration of the transitional period for the purposes of eligibility for EIB operations, the long lifecycles of the projects it funds—lasting well beyond the UK’s ‘exit day’—have meant that its lending in the UK has already decreased sharply. The EIB’s own figures show that between 1973 and 2017, it provided financial assistance to approximately 31 projects in the UK per year, with average annual support amounting to €2.6 billion (unadjusted for inflation). In 2016, the year of the referendum, the Bank signed agreements totalling nearly €7 billion of support across UK 65 projects. In 2017, that slumped to €2.1 billion across 17 projects (a year-on-year decrease in lending of 70 per cent). So far in 2018, the EIB has agreed support for only 8 projects in the UK (with a further three in the pipeline), amounting to €802 million.

19.37The Government indicated in late 2017 that it wants a “continuing arrangement”254 with the EIB, presumably so that large-scale UK projects would remain eligible for the substantial levels of support from the Bank. However, the nature of the ‘arrangement’ sought is unclear: the EIB’s Statutes (which can only be amended by the EU’s Member States unanimously) limit shareholder status to the governments of EU countries. Moreover, by law the Bank must focus its activities mostly on investment opportunities within the European Union.255 There has been no indication they would approve a Treaty change to accommodate the UK as a non-Member State shareholder of the Bank after Brexit, although this would allow the Bank to maintain a larger lending capacity. We are concerned by the absence of any concrete Government proposals for the new ‘arrangement’. For example, its recent White Paper on the future UK-EU relationship did not refer to the European Investment Bank at all. We have asked the Chief Secretary to the Treasury to clarify the Government’s intentions in this area, but until there is more certainty about any future UK-EIB partnership British projects are likely to continue to struggle to attract financial support from the Bank.

19.38In anticipation of further information from the Minister about the negotiations on the InvestEU legal framework, and the UK’s position on future participation in both the Programme and the broader work of the European Investment Bank, we have kept the InvestEU proposal under scrutiny.

Previous Committee Reports

None, this is a new legislative proposal. The Committee last considered the Regulation establishing the predecessor to InvestEU (the EFSI) in January 2017. See (38074), Twenty-Fifth Report HC 71–xxiii (2016–17), chapter 15 (11 January 2017).


223 The draft Withdrawal Agreement provides for a transitional arrangement during which the UK would effectively stay an EU Member State but without political representation, to last until 31 December 2020. The financial implications of any extension to the transitional arrangement would have to be considered as necessary in due course, since it would imply the UK stayed a contributor to the EU budget for the start of the next MFF.

224 However, under articles 136 and 137 of the UK’s draft Withdrawal Agreement the Government would remain liable for a share of any contingent liabilities which crystallise in relation to financial instruments issued against the EU budget before 30 March 2019.

225 The Joint UK-EU Report of 8 December 2017 reads: “The UK considers that there could be mutual benefit from a continuing arrangement between the UK and the EIB. The UK wishes to explore these possible arrangements in the second phase of the negotiations.”

226 See paragraph 0.36 for more information on the EIB’s lending to the UK since the referendum.

227 The European Investment Bank’s External Lending Guarantee was created in the 1970s, as was the ‘New Community Instrument’ which provided loans to mobilise investment.

228 Financial instruments are also used within the European Structural and Investment Funds, such as the Cohesion Fund and the Regional Development Fund, which are overseen at first instance by the EU’s Member States themselves (‘shared management’).

229 Within Horizon 2020, the financial instruments are provided under the InnovFin Debt and Equity instruments.

230 A full list of financial instruments currently used by the EU is available in the Commission Impact Assessment, document SWD(2018) 314, p. 121.

231 For example, the Creative Europe Guarantee Facility aims to “to facilitate access to finance for SMEs and micro, small and medium-sized organisations in the cultural and creative sector”.

232 The ESIFs are the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund, the European Maritime and Fisheries Fund (EMFF) and the European Agriculture Fund for Rural Development (EAFRD).

233 Following an increase in its capacity agreed in late 2017, EFSI now provides a budgetary guarantee of €26 billion underpinned by provisioning of budgetary resources of €9.1 billion. Moreover, the European Investment Bank Group provides additional risk-bearing capacity of €7.5 billion

234 The Fund needed to be established by the European Parliament and the Council, which they did via Regulation 2015/1017. [Operations approved under the Juncker Plan’s flagship programme—the European Fund for Strategic Investments (EFSI)—are expected to trigger €287 billion in investments as of May 2018. Around 635,000 small and medium-sized businesses are expected to benefit from improved access to finance.]

235 See for example “Final conclusions and recommendations of the High Level Group on Simplification for post 2020” (July 2017): http://ec.europa.eu/regional_policy/sources/newsroom/pdf/simplification_proposals.pdf.

238 Under article 8 of the EFSI Regulation, the current EU Guarantee can only be used for operations “carried out within the Union” or which involve at least one EU Member State as well as “one or more third countries falling within the scope of the European Neighbourhood Policy, […] the enlargement policy, the European Economic Area or the European Free Trade Association”. The Government does not currently envisage the UK would fall into any of those categories.

239 EFSI investments are required to have a relatively high level of risk, given the Fund is meant to bridge the investment gap by encouraging investments into projects that would otherwise be too risky.

240 European Commission Impact Assessment, document SWD(2018) 314, p. 3.

241 InvestEU would focus only on supporting investment in line with the EU’s ‘internal’ policies. It would not cover financial instruments provided by the EU in support of foreign policy objectives, such as the External Lending Mandate or the macro-financial loans to countries in the EU’s neighbourhood.

242 They may also provide funding and guarantees to other financial institutions, who then in turn offer eligible financing for investment projects.

243 The 2021–2027 Single Market Programme will also incorporate the COSME Programme, which provides support to small- and medium-sized enterprises. The current COSME Programme has a Loan Guarantee Facility and an Equity Facility for Growth, both examples of financial instruments.

245 European Commission Impact Assessment, document SWD(2018) 314, p. 2.

246 The draft Withdrawal Agreement provides for a transitional arrangement during which the UK would effectively stay an EU Member State but without political representation, to last until 31 December 2020. The financial implications of any extension to the transitional arrangement would have to be considered as necessary in due course, since it would imply the UK stayed a contributor to the EU budget for the start of the next MFF.

247 However, under articles 136 and 137 of the UK’s draft Withdrawal Agreement the Government would remain liable for a share of any contingent liabilities which crystallise in relation to financial instruments issued against the EU budget before 30 March 2019.

248 By letter of 24 July 2018, the Chief Secretary to the Treasury told us that the Government “is not in a position […] to set out a list of programmes that we will or will not seek participation in at this early stage”.

249 HM Government, “UK position paper on the future of Cohesion Policy“ (April 2018), p. 3.

250 For example, the Government has already announced the creation of a “Shared Prosperity Fund“, which would replace—in whole or in part—EU’s Structural & Investment Funds in the UK. The SPF is expected to provide support via financial instruments, although their exact scope remains unclear because the current EU rules are “considered to be complex and burdensome”.

251 BBC News, “Liam Fox: No deal most likely Brexit outcome for UK“ (5 August 2018).

252 In 2017, 90 per cent of new EIB agreements were for projects in the EU. Article 16 of the EIB Statutes states: “The Bank shall grant finance […] for investments to be carried out in the territories of Member States […]. However, by decision of the Board of Governors, acting by a qualified majority on a proposal from the Board of Directors, the Bank may grant financing for investment to be carried out, in whole or in part, outside the territories of Member States.”

253 Draft Withdrawal Agreement (19 March 2018), articles 143–144.

254 The Joint Report of 8 December 2017 reads: “The UK considers that there could be mutual benefit from a continuing arrangement between the UK and the EIB. The UK wishes to explore these possible arrangements in the second phase of the negotiations.”

255 Article 16 of the EIB Statutes states: “The Bank shall grant finance […] for investments to be carried out in the territories of Member States […]. However, by decision of the Board of Governors, acting by a qualified majority on a proposal from the Board of Directors, the Bank may grant financing for investment to be carried out, in whole or in part, outside the territories of Member States.” In 2017, 90 per cent of new EIB agreements were for projects in the EU.




Published: 18 September 2018