The UK has only been able to replace a third of public investment – and just an eighth of infrastructure investment – since leaving the European Union (EU), a think tank has warned.
EU funding of £146bn over 46 years had supported crucial infrastructure schemes such as the Channel Tunnel, the Thames Tideway Tunnel and London Underground upgrades.
After voting to leave the EU in 2016, the UK lost access to the European Investment Bank (EIB) which had supplied the cash, opting to create four new domestic development banks.
But the banks have only been able to replace around a third of funding and are yet to plug the gap, according to a new report by think tank the UK in a Changing Europe (UKICE).
The EIB invested an average of £6.4bn a year in real terms in the UK from 2009 to 2016 – but the successors, including the UK Infrastructure Bank (UKIB), invested £2.4bn in 2022.
Co-author Stephen Hunsaker said: “It is not clear that the UK’s domestic development banks will be able to fill the hole left by the EIB by the end of the decade.
“They lack staff and expertise, inhibiting them from scaling up operations quickly. Nor have they achieved the coveted AAA credit rating of the EIB. Consequently, they lend at higher rates, making it more expensive to lend to public-interest projects.”
Labour’s shadow City minister, Tulip Siddiq said: “The Tories’ failure to invest in British industry has left growth on the floor and our public services crumbling, with working people paying the price.
“Labour will unlock billions of pounds of private sector investment through our national wealth fund to deliver new gigafactories, clean steel plants and renewable-ready ports across Britain.”
While Liberal Democrat Treasury spokesperson, Sarah Olney MP, said: “This damning report highlights yet another broken promise from this Conservative government.
“We already knew farmers and [fishers] have suffered from the government’s failed trade deals, but now their investment plans are left in tatters too.”
Chris Hayward, City of London Corporation policy chairman, told City A.M.: “It’s clear we need to raise the overall investment levels across the UK which have been too low for too long.”
The corporation has a plan for financial and professional services expansion – dubbed ‘Vision for Economic Growth’ – which it says could unlock £225bn of growth and investment for the UK by 2030, and want to see a financial services council set up to drive this.
A HM Treasury spokesperson said: “The UIB was set up with £22bn financial capacity and is specifically designed to address net zero and levelling up, providing more targeted support than the EIB and is better aligned with the government’s objectives.
“In its first two years the UIB has done 20 deals worth over £1.87bn in digital infrastructure, green transport and clean energy, supporting 5,700 jobs across the country”.