The UK government indefinitely suspended payments worth £3bn from the European Development Fund in a move than is projected to have almost an immediate effect on the British economy. Firms say that they have been told that they would not receive any money from the European Regional Development Fund (ERDF). ERDF is the EU’s tool to promote economic growth and it has to be matched by payments from Member States. There were, however, rumors that the UK Treasury is afraid that it would not be able to continue paying its share.
In response to this move, a number of London-based companies appealed for this decision to be reconsidered in a letter sent to then Chancellor George Osborne. The letter was written by John Spindler, chief executive of non-profit firm Capital Enterprise, and it pointed to the promise of funding for more than 600 tech start-ups in the City. £3.7m was supposed to be distributed to these companies under the scheme called CASTS.
“Until last week we were on track to sign the full funding agreement in mid-July,” the letter said. “So it was with alarm that we heard … that, because of the referendum result, the Department of Communities and Local Government has notified the GLA [Greater London Authority] to inform Capital Enterprise that ERDF projects like CASTS, were to be put on ‘pause’ for an indefinite period.” The letter further urged the UK government to unblock this funding, saying that it is vital for the start-up and tech communities in London. “[The referendum] result has created a lot of uncertainty and raised questions for what it means for tech businesses in London,” the letter stressed.