Northern Ireland and the European Investment Bank

5 Feb 2015 Guest Author    Last updated: 25 Nov 2015

The European Investment Bank (EIB) was established in 1958 with a remit to finance investment projects which contribute to EU policy objectives. 

As the European Union's bank, representing the 28 member states, the EIB is seen as a low risk on the international borrowing markets, giving it a triple-A rating that allows it to borrow at favourable rates which it can pass on to its clients. The EIB generally finances one-third of each project but it can be as much as 50%.

In partnership with the European Commission the EIB has launched an Investment Plan for Europe, focusing on sectors of strategic importance to the European Union, including infrastructure (digital, transport and energy investments in line with EU policies); education, research and innovation; employment (particularly youth employment) and environmental sustainability.

The UK has benefited substantially from EIB borrowing, with €5.8 billion of investment in 2013 across several sectors of the economy - its largest loan to the UK to date. In that same year the EIB provided loans to the Republic of Ireland worth €680m in areas such as energy, transport, telecommunications, education, and health.

To date, EIB investment in Northern Ireland has been modest. It has included two major road infrastructure projects (€90m to upgrade sections of the M1 and M2 motorways in 2006 and €169m for the design, construction and maintenance of improvements to a 120 km section of the A1, A4 and A5 trunk roads) and a £150million loan in 2014 to Ulster University to part-fund the relocation of the Jordanstown campus to North Belfast.

One reason for this lack of investment by the EIB is the UK’s Treasury rules, which means if the Northern Ireland Executive borrows from the EIB, the same amount would be deducted from its block grant.[i] This would ultimately leave the Executive worse off as an EIB loan, unlike the block grant, is repayable with interest.

While local councils, private firms as well as voluntary and community organisations can avail of EIB finance without the block grant being affected, EIB typically only invests in larger scale projects than such organisations tend to deliver in Northern Ireland.

The reform of Local Government will result in larger councils with an expanded rate base and powers, potentially enabling them to deliver larger-scale projects that qualify for EIB investment. Meetings with the EIB have also been held with the Department of Finance and Personnel and the Strategic Investment Board to discuss the possibility of the EIB investing in projects of a scale more suitable to Northern Ireland. To this end the Executive are proposing in their Draft Budget 2015-16 “to establish a Northern Ireland Investment Fund...  [to] allow… the European Investment Bank… [to] invest in local projects that would usually be too small in scale to access this type of finance.” This would utilise Financial Transaction Capital funding, a new type of capital funding introduced in 2012-13.

EIB finance is therefore likely to play a greater role in Northern Ireland in the years ahead.

This article was written for the Centre for Economic Empowerment by Niall Quigley 


See also

[i] NI Assembly Research Paper – European Investment Bank: Financial Assistance for UK Local Government: p. 2. Accessed on 29/11/2014. Available at:


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