Brexit balance:Funds from European Investment Bank to neutralize impact

Brexit balance: Funds from European Investment Bank to neutralize impact

To help offset the Brexit impact on the Irish economic state, the vice-president of the European Investment Bank (EIB), Mr. Andrew McDowell said that it is coming out with new channels of funding for business corporations in Ireland. Ahead of the inauguration of Ireland’s first EIB office, he spoke in Brussels about this decision and elaborated on how Ireland could advance from the latest financing opportunities provided by the bank based in Luxembourg.

Speaking further, Taoiseach Enda Kenny’s former economic adviser and present nominee of Ireland to the EIB, Mr. McDowell said, “A big impact of Brexit will be seen on the consumer confidence and business in Ireland. The need of the hour is the support of Europe to help improve financial conditions in Ireland for enterprises and infrastructural projects.”

These remarks came in on the sidelines of the publication of European Commission’s assessment of Juncker plan (A flagship investment program that was announced in November, 2014). The Juncker plan is controlled by the EIB and also called as the EFSI (European Fund for Strategic Investments). It attracts private investment by way of leveraging initial funding offered by the budget of EU (European Union) and its member states. “Under the Juncker plan we have room for risk-taking ability and the lending capacity to directly affect the small as well as mid-size companies that was not possible in the past, “said Mr. McDowell. In particular, opening up channels of funding for SMEs (Small and Medium-sized Enterprises) is the reason the investment bank of EU is going for increased partnerships with the banking sector of Ireland.

Housing Projects

As part of the Juncker plan, various institutions of finance have been delegated as ‘intermediaries’ across different companies of Europe. But only a few banks of Ireland have shown interest in the scheme. Mr. McDowell said, “We haven’t shared a strong relationship with banks of Ireland like we do with those of Italy and Spain. We believe there is a great funding capacity of the commercial banks and we see an increased lending that could be done by them.”

The government and the EIB are engaged in active discussions about issues related to agribusiness sector and broadband infrastructure. Partnerships on housing projects are another prospects whereby long-term and cheap financing would be offered. Recently, in Britain and France, EIB participated in many housing projects part financed by local authorities and investors. Owned by the 28 member states of EU, the EIB provides for long-term financing at low rate of interests for infrastructural projects. In 2015, €755 million is the investment made by the EIB for higher education, transport, and other big projects.

“One reason a new office in Dublin was opened was to focus on Ireland’s low level financing provided by the EIB with respect to per capita in contrast to countries like Portugal, Greece, and Italy. In the past 7 years, the EIB has seen its business expansion in Irelend, especially after the sovereign debt crisis when many banks in Ireland were contracting, “said Mr. McDowell. He will take care of programs in Norway, Norway, Liechtenstein, Switzerland, Iceland, and the Yugoslav Republic of Macedonia (former) apart from Romania, Austria, and Ireland. He was appointed to the position on the management committee of the EIB which is worth more than €270,000.


His responsibilities as a part of the EIB involve focus at Southern Asia, primarily on India, Bangladesh, Sri Lanka, Afghanistan, Iraq, Iran, and Nepal. Leveraging €600 billion by 2020 is the expectation and scope of the Juncker plan. The duration of which has been extended to 2020. Three evaluations by independent agencies that includes a report by EY, have concluded encouraged investments across members of EU due to the EFSI by improved mobilizing and financing private capital as reported by the European Commission.

But in another report, questions were raised by HSBC on the success of the investment plan in engaging new investors in the finance of high-risk projects. Juncker plan financed an investment of €70 million in a life sciences company of Ireland called Malin among many other projects. Mr. McDowell said, “We believe high-risk lending has dramatically increased under the supervision of the Juncker plan. High-risk lending has gone from €3- €4 million to €20 billion approximately in 2016. Without EFSI, we would not have been able to achieve this milestone.”