BERLIN (Reuters) - The European Union’s financing arm, the EIB, on Wednesday offered to help offset a financing gap caused by Britain’s departure from the bloc and other emerging needs by leveraging higher budgetary guarantees and other financial instruments.
The European Investment Bank, which is owned by the European Union’s member states, uses its capital deposits as security to fund loans for research, infrastructure and environmental projects in Europe and around the world.
Britain’s exit from the bloc will leave a hole of 10 to 13 billion euros in the EU budget, according to some estimates, reducing funding available for infrastructure and other projects, but the EIB argues that increased use of its financial instruments can help plug that gap.
An EIB spokesman said the bank’s could “significantly increase” its funding in Europe if the share of resources from the EU budget used as guarantees was raised from 3 percent to 5 percent.
The German Sueddeutsche Zeitung newspaper, which first reported the proposed increase, said that would boost the guarantee volume by 3 billion euros to around 7.8 billion euros.
“The EIB stands ready to use more financial instruments during the next multiannual financial framework, guaranteed by EU budget resources,” a spokesman for the bank said.
Alexander Stubb, EIB vice president, told the newspaper: “We will help to ease the pain of Brexit.”
He said the bank could not completely offset the loss of Britain’s funding after 2020, but it could ease the pressure.
Any increase in the budgetary guarantees would have to be approved by the European Parliament and EU member states, the EIB spokesman said.
The changes, together with or instead of more traditional grants and subsidies, could help the EU “do more with less”, he said.
Using financial instruments such as loans and equity finance leveraged the EU budget by drawing in private investors, while ensuring the economic viability of projects, because recipients must repay these loans.
Reporting by Andrea Shalal; Editing by Gareth Jones and Alison Williams