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It was supposed to be educational, but I think my children may have regarded it as cruel and unusual punishment. On 9 December last year, when everyone else was dragging a Christmas tree back from town and ferreting around in the loft for decorations, family Threlfall was sat at the kitchen table going through TF50 (2017) 19 鈥� Commission to EU27, otherwise known as the Brexit phase one deal covering citizens鈥� rights, the Irish border and the financial settlement. 

The Daily Mirror described it as 鈥渧ery complicated鈥� but I thought that compared with previous documents published by the European Commission it was a model of clarity 鈥� a perfectly formed piece of fudge sandwiched between two capitulations. My logic for torturing my children with it was simply that after a year of opinion and political rhetoric, we finally had a published statement of agreement. A primary source document, as historians would call it.

Within its 96 paragraphs no fewer than eight are of direct relevance to UK infrastructure. Paragraphs 74 to 81 cover the European Investment Bank (EIB). They matter 鈥� quite a lot, I would argue 鈥� because while a small thing in the wider Brexit debate, the logic of the EIB is that a multilateral lender (that is, one supported by the creditworthiness of more than one country) helps drive up investment in circumstances where an individual country, sector or project may struggle to secure it.

If EIB loans were converted to commercial loans, it could add about 拢300m in cost over the next five-year investment period, which would be paid by customers

Over the years I have found that with all things financial, those who do not operate in the world of finance often find it baffling. So let me try to offer my plain English opinion of what is at stake, with acknowledgment to the National Infrastructure Commission for provoking the debate through its recent consultation on a national infrastructure assessment and to Andy Rose of the Global Infrastructure Investor Association, who led the comprehensive response on behalf of The Infrastructure Forum. 

• The EIB is a significant investor in UK infrastructure. Since we joined in 1973 it has lent to more than 1,400 UK projects. In 2015 it lent 鈧�7.8bn (拢6.9bn) and in 2016 鈧�5.2bn (拢4.6bn). All UK lending approvals are now on hold pending the outcome of the Brexit discussions.
• The UK will automatically cease to be a member of the EIB if it leaves the EU. We currently own 16.1% of it, with 鈧�39.2bn (拢34.5bn) invested. The 8 December agreement with the EU says that this will be repaid in equal instalments over 12 years. 
• So in simple terms the UK will get 鈧�3.25bn (拢2.86bn) a year back, but forfeit an estimated 鈧�5bn (拢4.4bn) a year in loans. So even if the government ploughed all of that money back into UK infrastructure, there would be a shortfall.
• The UK has a 拢600bn infrastructure and construction pipeline, of which the EIB would be expected to fund around 10%. That 拢60bn in funding is a huge deal. 
• EIB loans are generally cheaper than commercial loans, by between 0.5% and 1%. For example, in the water sector, if EIB loans were converted to commercial loans, it could add about 拢300m in cost over the next five-year investment period, which ultimately would have to be paid by customers through an increase in their water bills. 
• The EIB also helps to maintain investment levels when commercial markets are in turmoil 鈥� this occurred most notably in the UK in 2009 when the bank鈥檚 support helped the Manchester waste PPP reach financial close in the midst of the financial crisis. It also funds projects that are intrinsically riskier than the market would like, and in doing so helps encourage new technologies, as happened for example on our early offshore wind deals.
• Those ambivalent about the EIB argue that it simply displaces money that would have come from other sources, rather than creating additional investment. But the EIB focuses on projects that are intrinsically difficult to fund and rarely funds all of a project. It provides a cornerstone loan that makes other financial institutions feel more inclined to lend. It is basically the same as John Lewis agreeing to take the first plot on a new shopping development.

The EIB focuses on projects that are intrinsically difficult to fund [鈥�] It provides a cornerstone loan that makes other financial institutions feel more inclined to lend

In theory we could create a UK version of the EIB, except by definition it would rest solely on the UK鈥檚 credit and be at the mercy of our economic success and political whim. The Infrastructure Forum looked at multiple alternatives, and none of them looked attractive. 

The truth is that our EIB relationship is a potential civilian casualty in a wider war. The chancellor鈥檚 June 2017 Mansion House speech acknowledged that the EIB is an important source of finance for UK infrastructure, and the door is left open in the 8 December agreement to a 鈥渃ontinuing arrangement鈥�. Better still would be a treaty change allowing us to stay in the EIB, and allowing the EIB to continue to invest in our future Britain.