If you owned 16.1pc of the European Investment Bank (EIB) would you give it away free to the other wealthy members as you leave the EU?
That’s what Philip Hammond, the former chancellor and his team of civil servants have done.
Hidden in Theresa May’s discredited Withdrawal Treaty, ex-Chancellor Philip Hammond (then also on the Board of Governors of the EIB) gifted it €7.5bn of taxpayer's money for no concessions. He then accepted a 12-year repayment of €3.5bn with no interest, from a bank making €5bn profits in just the last two years.
The ultra-Remain ex-chancellor was prepared to leave the UK credit card open over a decade to ensure the EIB can continue to lend on non-commercial terms to the EU 27 at UK taxpayer risk.
The UK is also treaty-bound for another €36bn of “callable capital”. This is money we will pay to underpin the EIB if the eurozone collapses. Additional toxic risk exposure comes through the EU Budget which guarantees €500bn of EIB loan note risk that we would be exposed to during any “transition”. It is a truly toxic trick, conjured up by Hammond and his team.
But how did this happen?
Under May’s Withdrawal Treaty, the UK’s initial EIB capital contributions, mostly given in 1973, of €3.5bn – in today’s money roughly €35bn – can be repaid in 12 instalments of around €300m a year.
This article provides a good example of the reasons why a substantial number of people believe the deal negotiated by Theresa May’s government is untenable. It gives up all of the UK’s primary negotiating points without demonstrating what concessions, if any were won in return.Click HERE to subscribe to Fuller Treacy Money Back to top