Economy Set to Get a Big Boost with New Infrastructure Bank


  • The UK treasury has launched a new infrastructure bank in the Leeds.
  • The bank will fund various infrastructure projects across the UK through debt, equities and guarantees.
  • The investment will be across multiple sectors such as transport, renewable energy.

The UK Treasury launched a new Infrastructure Bank in Leeds. The bank reportedly will unlock more than £40 billion of overall investment to boost the growth across the UK.

As per UK Chancellor Rishi Sunak, the bank would funnel cash to the projects that will be beneficial for the people of the UK. The funded projects will create new job opportunities across the UK.

Through this new infrastructure bank, the UK treasury will finance various projects across multiple industries such as transport, renewable energy, carbon capture, digital connectivity. It will also help deliver UK’s commitment to cut carbon emissions and reach net zero by 2050.

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What the bank is aimed at?

To achieve the desired results, the bank will work in collaboration with local government and private sectors to support and finance various infrastructure projects. The projects will be funded by debt, equities or guarantees. This step will help the country to avoid the further damages that the coronavirus pandemic can cause and will also speed up the post pandemic recovery.

The capital financing process will consist of lending equity and guarantees to private businesses, followed by lending to the local authorities. Though the dates are not specified yet, but most likely the lending will start later this summer.

This infrastructure bank will be able to buy equities of £5 billion in the UK infrastructure projects, at the same time, it would lend £7 billion as well as guaranteed loans of £10 billion, totalling up to £22 billion of financial capacity.

Do Read: Need of An Infrastructure Bank for the UK And Role of Private Investors

Is the bank adequately funded?

Sunak in his March budget had pledged £12 billion for the creation of the new UK Infrastructure Bank. If we go 5 years back, in 2016, the public sector invested around £19 billion on infrastructure, out of which 40% was from the local government’s coffers.

According to Kate Blagojevic, Greenpeace UK’s head of climate, the amount allocated for this new infrastructure project by Chancellor Rishi Sunak is very small compared to what is required to build a green economy and create thousands of additional jobs.

Adding to which he further said, if the treasury is looking to get some support from private sectors, then UK chancellor should make some relaxation in the policies so that private sector can contribute to the transition of the UK. He also said, “the Withdrawing funds for tackling energy efficiency earlier this year is the perfect case in point.”

Also Read: UK, US, Germany come forward to tackle climate change: Key details to know

However, there are some supporters as well, Mike Cherry, Federation of Small Businesses national chairman praised this step of Sunak in fulfilling his commitment towards the new infrastructure bank as the economy is gradually recovering from the severe recession.

According to Infrastructure bank Chair Chris Grigg, the opening of this infrastructure bank will fuel up the economic growth and will bring the country a step closer towards its ambition to cut down carbon emissions.

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