The government's new public sector lenders, created since Brexit, are investing two-thirds less than the UK was receiving from the EU's European Investment Bank, a new report finds.
For more than four decades, the EIB has supported projects ranging from the Channel tunnel and Manchester Metrolink to offshore windfarms and upgrading the National Grid.
The thinktank UK in a changing Europe has compared the EIB record with the work of new Treasury-backed institutions, including the UK Infrastructure Bank.
Between 2009 and 2016 the EIB invested an average of £6.4bn in the UK, peaking at£7.5bn in 2016 - the year of the Brexit referendum.
By contrast, the successor institutions created by the government, including the Leeds-based UK Infrastructure Bank, invested in 2022 - a third as much as the EIB was spending six years earlier.
By the end of the decade, s domestic development banks will be able to fill the hole left by the EIB. They lack staff and expertise, hindering them from scaling up operations quickly, said Stephen Hunsaker, co-founder of the report.
The new institutions - the EIB, the Scottish National Investment Bank, the Development Bank of Wales and the British Business Bank - appear to be less focused on infrastructure projects than the EIB.
Between them, they invested just 17% in infrastructure projects in 2022 as the EIB did before it began winding down its links with the UK.
The failure to invest in British industry has left growth on the floor and our public services crumbling, with working people paying the price, said Labour shadow minister Tulip Siddiq.
UKIB's chief executive, former HSBC chief executive John Flint, has suggested it will accelerate investment in the coming years, particularly on projects connected to the government's net zero ambitions.
The UK in a report titled Changing Europe argues that the UKIB's growth will be constrained by strict Treasury limits on lending that are imposed to protect taxpayers' money.
Private sector lenders like the EIB aim to harness the lower borrowing costs and longer time horizons of governments to support projects that private investors consider too risky.
By giving a clear chance for a project to go ahead, they can then 'crowd in' private funding.
Hunsaker says that the new institutions have backed fewer, smaller and lower-risk projects so far. The UKIB made a significant investment in a Cornish lithium mine just a few years ago, raising the prospect of a significant investment by the UKIB.
The analysis reveals that EIB projects were not evenly spread across the UK. Between 2010 and 2019, the bank invested £858 per capita in Scotland and £773 a head in London - far above the £180 in Yorkshire and the Humber.
Rishi Sunak, former chancellor of London, launched the UKIB two years ago, saying it would contribute to the government's levelling up agenda. The thinktank suggests that there is little evidence of that happening so far, with most UKIB projects either nationwide or covering multiple regions.
The only sector in which domestically backed banks have matched EU institutions is in lending to small and medium-sized businesses.
Vince Cable, then the secretary of finance, led the British Business Bank, which has surpassed $1bn in lending last year, surpassing the maximum lent by the EIB's small business arm, the European Investment Fund.
The UK Infrastructure Bank has a financial capacity of £22 billion and is specifically designed to address net zero and levelling up, offering more targeted support than the EIB and is better aligned with the government's objectives.