Plans to create a Northern Ireland Infrastructure Fund to attract investment for large-scale improvement projects have been dealt a major blow by the European Investment Bank’s (EIB) decision to step back from the project in the wake of Brexit.
In May 2015, Arlene Foster, who led the DUP in campaigning for the UK to leave Europe, met with European Commission Vice-President Jyrki Katainen in her role as Finance Minister to discuss the creation of an investment fund. At the time she was quoted as saying: “I will be doing what I can to ensure that Northern Ireland makes the most of opportunities presented by the Investment Plan for Europe.”
Months prior to that, Foster’s party colleague Simon Hamilton held the finance portfolio. He outlined ambitions for the EIB to provide financial support to the Fund. Speaking about £40 million of Executive funding he said: “We hope that [this] will leverage in additional finance from, first and foremost, the EIB, which we have been working with incredibly closely on this project. I pay tribute to the EIB for its engagement and genesis of the fund and throughout the last year.”
A feasibility study into the fund commissioned by the Department of Finance later in 2015 identified the EIB as a “potential matched funder”.
However, it has been revealed that following the Brexit referendum, the bank, which represents the interests of European Union member states, wrote to the Department to state that it would not be offering direct support due to the “non-EU origin” of the funding.
Set up in 1958, the bank’s remit revolves around financing investment projects which contribute to EU policy objectives. It borrows from international markets at a favourable rate and its Investment Plan for Europe, in partnership with the European Commission, placed a focus on sectors such as infrastructure, education, research and innovation, employment and environmental sustainability.
Northern Ireland’s unique block grant funding from the UK has meant that EIB investment in Northern Ireland has not been as prominent as it has been in the rest of the UK or, in particular, in the Republic of Ireland (money borrowed from EIB would be reduced from the block grant and would have to be paid back to EIB with interest).
In 2013 alone the EIB provided loans of €680 million to the Republic of Ireland for projects such as energy, transport, telecommunications, education and health. However, in Northern Ireland total investment has been limited to less than €200 million for major road improvements such as the M1 and M2 and £150 million for the relocation of Ulster University.
However, hopes of greater investment have now been ruled out by the EIB. Responding to a written Assembly question by the Alliance Party’s Chris Little, Finance Minister Máirtín Ó Muilleoir confirmed that a letter had been sent offering only “advisory support”.
“The EIB has indicated that direct delivery and management of the investment fund is outside of usual EIB ‘core’ business,” he said.
“Following the result of the EU referendum, the EIB president, Dr Werner Hoyer, wrote to me confirming that: ‘The non-EU origin of the NIIF’s funding means that we are unfortunately not In a position to commit to act as fund of fund manager for the NIIF’.”