techUK has today published a report into the critical importance of the European Investment Bank (EIB), and its subsidiary the European Investment Fund (EIF), post Brexit.
The report, Breaking the Brexit Bank: The Benefits of Retaining UK involvement in the European Investment Banks and the European Investment Fund, sets out the value of the UK tech industry of the institutions, and particularly the EIF, in supporting investment in UK tech innovation and scale-up.
The report highlights the UK's position as the European leader in securing Venture Capital and Equity financing, with the vast majority flowing to tech businesses. It argues that the EIF's role as an 'anchor funder' for Venture Capital Funds has helped drive this investment while also mobilise additional private capital into the UK from around the Europe and the rest of the world. It notes that private institutions, such as Barclays Bank, hold shares in the EIF meaning that the UK could seek to retain our stake in the Fund, which is currently held due to UK membership of the EIB, through a similar private investment.
The paper also warns that withdrawing from the EIB may not see the swift return for UK assets, meaning that withdrawal is unlikely to see the return of capital to the UK Government in the short term. The ability to return the €10.2 billion of British contribution to the bank was seen by some as an argument to leave the EIB. If this is not possible, the benefits of seeking to continued involvement in the Bank significantly increase.
Finally, the paper praises the role of the UK's British Business Bank, but warns that attempts to replace EIF investment with a national fund are unlikely to be able to mobilise the same volume of international private investment. As a result, the paper calls on the Government to make retaining a stake in the EIF a priority of Brexit negotiations.
Commenting on the launch of the paper, techUK CEO, Julian David, said:
"Losing the EIF risks seriously damaging the ability for innovative new or rapidly growing tech companies to get the funding they need. The case for the UK retaining a piece of the EIF is overwhelming from an economic and practical point of view.
"Of course we need to do more here in the UK to support the growth of Venture Capital Funds and access to finance, but cutting ourselves off from an internationally respected source of anchor funding would be to truly pull up the drawbridge on Global Britain.
"The EIF is ultimately a private institution, with financial backers. It would be a very bizarre situation is banks like Barclays retain a stake in the fund, but the UK itself, and the tech companies we create, can no longer benefit."