The European Investment Bank’s €85 million investment loan to develop Limerick’s Opera Centre may be the first big step in the city’s plan to benefit from Brexit. A matching loan from the Council of Europe means Limerick has €170 million to redevelop the city and make it an attractive investment prospect for businesses as the UK leaves the European Union.
The UK will leave the EU in March 2019 and its European neighbours are expected to benefit as international corporations relocate to countries remaining in the EU customs union. A source with knowledge of the deal told Limerick Life that Limerick will attempt to position itself as an investment location post Brexit. The city hopes to be a hub of new economic activity as Dublin is ‘overheated.’
Dr Martin Mullins, Head of the Department of Accounting and Finance in UL and a columnist for this newspaper, agreed that Limerick could win investment in a post-Brexit economy. He pointed out that Minister of State Michael D’Arcy has been putting in place a financial services plan to attract business to the regions and ‘put Limerick on the map.’
“Ministers don’t want to mention Brexit,” Dr Mullins said. There has been little mention of Brexit from local officials celebrating the EIB and Council of Europe loans but the issue is informing their thinking.
“Dublin is matured in how much more business it can take,” Mullins said. “Companies are looking to invest. Limerick has a critical mass of financial services. It’s beginning to get that financial ecosystem.”
The EIB loan is part of a larger, Europe-wide investment drive, partly aimed at preparing for the UK’s imminent departure from the EU. The so-called Juncker Plan, named for European Commission President Jean-Claude Juncker, has seen the EIB invest millions to support jobs growth and small and medium-sized business. The plan initially aimed to replace the investment gap caused by the recession. With the potential economic threats from Brexit, securing investment has never been more important, especially as the Irish economy is so closely linked to the UK.
The EIB loan will be paid off in 25 years at an interest rate of 1.2 percent. However, the ECB recognises that it gives different terms to different partners, meaning the exact nature of repayments – including the cost – may not be immediately apparent. Though the conditions are currently favourable, changing economic conditions could see costs rise.
The terms of the Council of Europe loan are not yet available, but as a matching loan it is likely to be subject to the same conditions. There are concerns that taking on two large loans at the same time could cause financial difficulties for the Council if there is an economic slowdown. The institutions involved hope the investment will improve Limerick’s economic outlook and allow the city to benefit from Brexit rather than suffer from it.