Werner Hoyer, president of the European Investment Bank, says recent levels of lending to the UK 'cannot be maintained'
Werner Hoyer, president of the European Investment Bank, says recent levels of lending to the UK 'cannot be maintained' © Reuters/AFP

British companies will have difficulties borrowing for infrastructure projects from the European Investment Bank as Brexit draws closer, the head of the EU bank has said.

In a blow to Philip Hammond’s ambition to bolster the UK economy with increased infrastructure spending, Werner Hoyer, the president of the EIB, told the Financial Times that recent levels of lending to the UK “cannot be maintained”.

To replace cheap lending from the bank — €7bn on average in recent years — UK companies will have to look elsewhere to borrow for schemes ranging from buying trains to putting smart meters in homes.

The EIB is a wholly-owned EU bank which uses its expertise to lend and co-finance infrastructure projects and can itself borrow cheaply because it is underpinned by the 28 EU member states.


EIB loans to the UK
● £200m to improve Oxford university’s research and teaching
● £400m for social housing in London
● £1bn for installing electricity smart meters
● £150m to expand the Port of Liverpool.


The Luxembourg-based lender’s books currently have close to €50bn of finance for British projects, and while existing lending will be protected by the contractual terms, new projects will increasingly struggle to obtain finance from the bank, which requires approval from member states to lend.

Only EU members can be shareholders of the EIB. Britain currently has a 16 per cent stake and it was inevitable that Britain’s departure from the EU would raise fresh problems in infrastructure financing, according to Mr Hoyer, particularly in areas of climate change mitigation, energy efficiency and transport.

“The UK is relying heavily on us and there are many people in the UK who will miss the EIB,” he said.

Before Britain leaves the EU, he said the country would remain a full partner in the bank, but could not expect lending levels to remain as high as they have been without UK government indemnities on lending.

“I foresee developments in the [Brexit] negotiations that will make it not easier to continue with lending decisions because these will have to be taken not by the management of the bank at the end of the day, but on our proposals by the representatives of the member states.”

He said he would like to keep lending for UK projects because they were some of the strongest on the EIB’s loanbook. The Treasury would have to provide guarantees and indemnities, but that was unlikely to be sufficient.

“Even if we find a way to continue lending in the UK, I am absolutely sure that the enormous volumes we have achieved over the last couple of years cannot be maintained,” Mr Hoyer said.

But a UK government spokesman said: “While the UK remains a full member of the European Union it retains all of the rights, obligations and benefits that membership brings.

“That means nothing has changed when it comes to lending to UK projects by the European Investment Bank. The long-term relationship between the UK and the EIB will need to be resolved as part of the UK’s withdrawal from the EU.”

The EIB does lend to countries outside the EU, but in advanced non-EU members such as Norway and Switzerland its lending presence is roughly a tenth of the scale of its lending in member states relative to the size of their economies.

Brexit will also cause severe problems for the 300 UK staff who work for the EIB because being an EU national is currently a condition of employment in the bank’s statutes.

Mr Hoyer warned other European leaders that the infrastructure needs of the continent were enormous at roughly €700bn a year, but actual investment levels fell far short.

He pledged the EIB would continue to play its part in bridging the gap and said it was ahead of schedule in providing €315bn of lending under the Juncker plan to increase EU investment, but Europe needed to look outward if it was to have a brighter future.

“The neglect of public and private infrastructure is a big sin against our [EU] recovery,” Mr Hoyer said, adding, “even rail tracks, bridges, roads and ports are sometimes below the standards which we find in emerging markets”.

He called for stronger political leadership and a vision for the future which gives power back to member states in areas the EU has spread its powers too far, but completes the single market where it has not gone far enough, for example in services including the digital economy.

“For 10 years, Europe has been inward-looking,” he said.

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