House of Commons Library

The European Investment Bank

Published Thursday, November 16, 2017

Based in Luxembourg, the European Investment Bank is the European Union’s bank, lending to projects that contribute to growth and employment within Europe. This briefing gives a short overview of the Bank's membership and operation, and discusses some of the issues surrounding the UK's future relationship with the Bank following Brexit.

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The European Investment Bank (EIB) was set up in 1958 under the terms of the Treaty of Rome. It is owned and controlled by the EU member states, and 91% of its lending has gone to countries within the EU. However, it does also back projects that are outside the EU, so long as they are economically sound and in line with the Bank’s policy goals.

The Bank leverages capital paid in by its members to raise money on international bond markets at low rates, and lends out this money to projects. It chooses the projects to lend to based on the priorities of the EU, with decisions taken by a Board of Directors nominated by the EU member states.

The UK has paid in €3.5 billion in capital to the EIB (16% of the total). Since the Bank’s founding, projects in the UK have received €117 billion in loans, 9% of the total lent.

EIB loans to the UK

There is considerable debate about how the UK will work with the EIB after it leaves the EU. The main points of contention surround the capital that the UK has paid into the Bank, what any ongoing relationship with the Bank would look like, whether projects in the UK will continue to receive loans, and whether the UK could create its own replacement for the Bank.

The European Investment Fund, an offshoot of the EIB partly owned by private financial institutions, supports small and medium-sized enterprises throughout Europe by providing risk financing (for example, by backing venture capital firms). Its funding of UK venture capital has slowed since the UK’s vote to leave the EU, although potential replacements have been mooted by the UK Government.

Commons Briefing papers CBP-8145

Author: Philip Brien

Topics: EU institutions, Financial institutions, International economic relations, Loans

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