Newspaper article The Journal (Newcastle, England)

Experts in Talks to Create Pounds 125m Fund; ECONOMIC CRISIS

Newspaper article The Journal (Newcastle, England)

Experts in Talks to Create Pounds 125m Fund; ECONOMIC CRISIS

Article excerpt

THE region's top financial experts are in talks to create a pounds 125m European investment fund which would see cash made available to small North East businesses struggling to find bank support.

The European Investment Bank has been asked by regeneration bosses at One NorthEast to consider providing up to half the cash for a groundbreaking funding initiative.

The request comes as the credit crunch continues to force many of the region's smaller companies to look again at plans for the future.

Development chiefs have been aware since the summer of a worsening "market failure" which they say would justify intervention using a multi-million pound pot of public funding.

Since then they have entered into talks with top European Union bankers in the hope of starting up a rescue fund sometime next year.

If agreed the so-called JEREMIE scheme will open the way for thousands of small and medium sized businesses to access loans and guarantees at a time when banks are increasing unlikely to help.

The cash will need approval from both Government and European officials but if passed development bosses are convinced it will place North East businesses among the best supported in the country.

One NorthEast deputy chief executive Malcolm Page said: "This could enable us to create a holding fund with a large proportion of European Regional Development Funding, hopefully matched with private sector investment finance from the European Investment Bank and Single Programme funding.

"It has the potential to bring in pounds 125m over the next five years.

"JEREMIE is an exciting project but there is still a huge amount of collaborative work to complete with the Government, the European Commission and European Investment Bank over the next couple of years to bring it to fruition.

"These resources will help us to create a significant long-term legacy, so in 10 years' time we will hopefully have investment funds available for regional SMEs to continue the good work, after the current European structural programmes have come to an end. …

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