Policy & MarketMore
Fears that UK green bank will suffer after deficit miss
The UK government has been urged to clarify the position of its new Green Investment Bank (GIB), after fears that the failure to hit deficit-reduction targets would delay its ability to assume full borrowing powers.
The GIB was launched last month with an initial £3bn ($4.8bn) to support low-carbon growth, with offshore wind named as an early priority area.
The GIB was initially barred from assuming full borrowing powers until 2015 – which many see as crucial to it achieving the firepower needed to make a real impact – to avoid adding to the national debt.
But UK finance minister George Osborne today admitted the UK will not hit its debt reduction targets until a year later.
The UK Association for Consultancy and Engineering (ACE) claims this could leave the GIB in its current state until 2016.
ACE chief executive Nelson Ogunshakin says: “By linking the new bank’s borrowing powers to a target that government may not be able to hit, industry is unable to plan with any certainty for those borrowing powers to come into force.
“Government should change the rule and fix the date on which the Green Investment Bank can start to borrow so as to provide certainty for industry as it plans to deliver growth through infrastructure investment.”
Industry body RenewableUK says: “It’s a tough investment climate at the moment and a further delay to the ability of the Green Investment Bank to help priority sectors like offshore wind comes as a bit of a blow”.