Economic Myths: The European Investment Bank

Former UKIP leader Diane James, in City AM:

... at the same time as demanding that Britain must settle its divorce bill before trade can even be discussed, the EU has decided that the UK must wait decades to have what rightfully belongs to us.

Werner Hoyer, president of the European Investment Bank (EIB), has declared that the UK won’t get back its 16 per cent stake in the bank – worth several billions euros – until 2054.

She then treads the fine line between perpetuating myths and debunking them for a few paragraphs.

Point is, the UK government has lent/invested a large sum of money to/in the EIC; and various UK quasi-governmental bodies have received large loans from the EIB. Two large numbers in equal and opposite directions. Minus one from t'other and you end up with a much smaller number.

The loans which the EIB has made presumably have fairly long-term repayment schedules, so it's not unreasonable for the EIB (going with the fiction that it truly is an independent 'bank') only has to repay the UK's original investment/loan/accumulated profits at a similar speed. The UK government bodies only have to repay their loans to the EIB over decades. Again, in the normal course of events, minus one from t'other and the net annual payment is a much smaller number.

So it would be cleaner and simpler to cut out the middleman and to transfer the UK govenrment's investment in and loans from the EIBs (assets and liabilities) back to the UK government, at which stage the whole lot can be netted off and disappears in a puff of smoke. The UK government can't owe itself money.

There will probably still be a net small balance owed by the EIB to the UK government, which we can just chuck into the mix with all the other amounts which the UK owes the EU (membership fees for the next two years) and which the EU owes the UK (UK's pro rata share of value of EU assets, like all the land and buildings in Brussels and Luxembourg).

If you keep doing this long enough, the balance owed in either direction will be chump change and nobody will care.