THE collapse of the pound against the euro will provide a £20m Christmas boost to the Merseyside economy – if the region is given the time to spend it.
The unexpected bonus has come about in the last few weeks of the region’s Objective 1 programme, currently near the end of a £1.3bn investment cycle which began in 2000.
Money destined for Merseyside is held in euros until it is drawn down for projects, and, with the euro soaring towards parity with the pound, millions in extra funding have become available.
It is hoped the windfall could be used to help small local businesses, or even help pay to extend the city’s Cruise Liner facility. Since the start of the current Objective 1 programme, the euro has strengthened from 64p in 2000 to 93p yesterday.
That has resulted in an £80m exchange rate gain for Merseyside, a figure which rises to £100m when gains from the Objective 2 programme, due to start next year, are taken into account.
Of that, much has already been spent, but £10m in exchange gains remain, and current strictly applied rules say the money must be used by the end of the year or be returned to Brussels.
But the EU has recently agreed to give Merseyside and other Objective 1 regions an extra six months to spend any spare cash.
Europe believes the money would be best used in helping to alleviate the impact of the credit crunch and economic downturn.
But there are concerns locally that Whitehall could yet block the extra time, and the cash that goes with it, because the UK government is obliged to match-fund the contribution, leaving £20m at stake.
Cllr Flo Clucas, Liverpool’s executive member for economic development and Europe, said: “The extra time has been offered because of the economic situation. The EU has said it is happy for any member state to extend its programme.”
Cllr Clucas said the extra money would be best directed to small firms, possibly through the Merseyside Special Investment Fund, which invests in local businesses. It could also be used to make the city's Cruise Line facility bigger. Cllr Clucas said: “Given the current circumstances, anything that can be done to help small firms through current difficult trading is to be welcomed.
“If the EU says we can spend it, then we should be allowed to do so.”
Her views were echoed by Liverpool Chamber of Commerce chief executive Jack Stopforth.
He said: “The UK government is less in favour of the idea, but they ought to be. It’s an open goal for them to put money into recession- hit areas.
“It’s a no-brainer.
“We are putting pressure on Government Office North West as it would be an enormous help if the programme was extended for six months.”
The UK government decision involves three Whitehall departments – the Treasury, the Department for Communities and Local Government (DCLG) and the Department for Business Enterprise and Regulatory Reform.
Last night, a spokesman for the DCLG said: “We have received a request from Europe to extend the Merseyside programme by six months and we are currently considering it.”
OPINION: PAGE 6
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