EU supports poor UK regions

If investing in regional UK VC funds proves a success, the European Union will look to implement similar projects in other EU countries.

The European Union is committing more than £50m into the UK regional venture capital funds launched in 1999 by the UK’s Chancellor of the Exchequer Gordon Brown.

Prior to taking the decision of investing in the project, the EU was busy establishing whether their input in the funds, aimed at providing the poorer regions of the UK with equity capital, constituted unfair state aid.

The money will be placed with, and passed on further by, the European Investment Fund, the venture capital vehicle that is owned by the European Investment Bank and the European Commission.

A string of private banks and institutions are also participating in the project. Barclays Bank recently committed £66m to the project.

Barclays has taken great interest in this area of investment and has committed large amounts of money to similar projects including around £200m to its Urban and Regional Economic Unit, which it launched in February.

In November it pledged a further £84m to four funds in earmarked for investment in what the UK Government has dubbed Objective One areas, i.e. particularly disadvantaged regions. These include Cornwall, Merseyside, South Yorkshire and West Wales.

The first of the publicly supported fund with money from the EU is expected to launch by the end of the year. It will invest around £500,000 in small businesses. If the venture is successful, the EU will look to implement similar projects in other EU states.