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10/16/16

Britain - EU: Why is Britain's new government keeping quiet about its 40B-euro share in the EU's own bank? - by Martin Jay

A row between experts and Ford U.K. over EU loans to its competitors outside of the EU has thrown light on Britain's 40 billion euro stake currently in the EU's own "investment" bank - which could go a long way towards helping the country's health service and creating jobs if it were to be sold to another EU country.

This week a spokesman for the European Investment Bank (EIB) told Daily Sabah it couldn't speculate as to whether Britain's 16 percent could be worth 40 billion euros - which it represents on paper - a tidy sum that Theresa May could use for creating jobs, or funding small businesses. "Unlike other international finance institutions there is not a clear overview of how the U.K. shareholding could be valued," Richard Willis told Daily Sabah, adding, "Therefore the paid in capital as below is one figure and the other is simply 1/6 of all EIB assets. We cannot speculate on this."

Post Brexit talks in Brussels have produced a bitter reaction from the European Commission which is likely to argue that Britain needs to sell its stake in the EIB though - yet may well still benefit from loans to British companies.

Although a Brexit won't stop the practice of the EIB giving whacking loans to companies - outside of the EU - that compete with British ones, which experts are warning are still costing British jobs.

Yet Britain leaving the EU would also mean pulling out of the bank which, in theory, could give the chancellor a cheque for its matured equity stake now believed to be worth 40 billion euros - despite only putting in 3 billion euros of its own money since the 70s.

Such a cash injection, some may argue, would have provided the shortfall the U.K. finance minister would have needed to balance the books, helping firms like Ford U.K. compete with its Turkish competitor benefitting from EIB support.

And Britain will need it now that more EIB loans will be given to many foreign firms that U.K. companies will be competing with them.

British car workers jobs at the Ford plant in Dagenham, for example, could be at risk after experts fear that two EIB loans for Ford factories in Turkey threaten to erode Ford U.K.'s profits, costing jobs.

Could Britain have its cake and eat it, too? Could the government sell its 40 billion pounds stake in the EIB while U.K. firms continue to benefit from commercial loans at the same time? Could it also get assurances that loans will no longer be given to companies whose profits impact directly on U.K. jobs?

"There is simply no roadmap for the process. We would expect that the role of EIB would be one of many issues discussed and covered in lengthy withdrawal negotiations," Richard Willis said recently.
 
Read more: Why is Britain's new government keeping quiet about its 40B-euro share in the EU's own bank? - Daily Sabah

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