European Investment Bank

HC Deb 24 June 1985 vol 81 cc321-2W

Mr. Lewis Stevens

asked the Chancellor of the Exchequer what steps have been taken to increase the capital of the European Investment Bank; and if he will make a statement.

Mr. Lawson

At its meeting on 11 June 1985, the board of governors of the European Investment Bank agreed that the subscribed capital of the bank should be doubled from 14.4 billion ecus to 28.8 billion ecus from 1 January 1986. Accordingly the board formally decided to increase the subscribed capital for the existing EC member states to 26.508 billion ecus; and further noted that, upon the accession of Spain and Portugal to the Community, subscribed capital would rise further to 28.8 billion ecus, as a result of those member states' subscriptions.

The need for the capital increase arises because EIB own resources loans outstanding are limited to 2.5 times the level of member states' subscribed capital. By the end of 1985, EIB will be close to the current limit, and the new capital increase will allow continued expansion of EIB lending and its contribution to Community development.

Within the new level of 28.8 billion ecus, there will be a redistribution of subscribed capital to bring Italy's subscribed capital up to the same level as that of the United Kingdom, France and Germany.

As a consequence of these decisions, the United Kingdom's subscribed capital will rise from 3.15 billion ecus to 5.509 billion ecus; and the United Kingdom's share of subscribed capital in the enlarged Community will be about 19.1 per cent., the same as that of France, Germany and Italy.

The board of governors also decided that member states would pay in 7.5 per cent. of the increase in subscribed capital, in 12 semi-annual instalments beginning on 30 April 1988 and ending on 31 October 1993. Thus, the United Kingdom will pay some 29.5 million ecus—or about £17 million at the current rate of exchange—in each of the financial years from 1988–89 to 1993–94 inclusive. Payments will be charged to the Consolidated Fund, under section 2(3) of the European Communities Act 1972.

To match the redistribution of subscribed capital described, there will be a redistribution of title to EIB reserves and provisions, as they stand at the end of 1985.