A MULTI-BILLION pound deal to boost investment in Edinburgh and the surrounding region could be under threat as a result of Brexit, politicians have warned.
The long-awaited City Region Deal aims to inject up to £2 billion of public money into the regional economy – with the potential to lever in a further £5bn of private sector cash.
The much-needed funds would be used to kick-start massive infrastructure projects and development, as well as pumping extra investment into culture and tourism.
But opposition councillors insisted the “deep political instability” caused by the UK’s decision to exit the EU could throw the whole thing into chaos.
The move came as university bosses warned of “major implications” for higher education on the back of the result and Edinburgh Airport raised concerns over the impact on airlines operating out of the Capital.
Councillor Gavin Corbett, Green economy spokesman, said: “The City Region Deal has been in preparation for almost two years now and is due for final submission to UK and Scottish Governments in the late summer.
“The City Deal offers a massive opportunity to forge a new kind of low carbon, jobs-rich, high-skilled economy through major investment in transport and public places and building on the region’s natural strengths such as its universities and food production.
“It is a once-in-a-generation chance to transform the regional economy. But the UK exit vote comes at exactly the wrong time, for three main reasons. First of all, it leaves a period of deep political instability at a time when the UK Government needs to be making real long-term decisions.
“Secondly, it jettisons the role which EU programmes have played for a long time in investing in infrastructure, pioneering new standards of low-carbon development, encouraging labour mobility and easing international exchange of ideas in universities.
“And thirdly, it sends a signal to would-be investors that the UK is turning in on itself, and declining to learn from the best of our international competitors.
He added: “Of course, the bitter irony is that, in a city where people voted three to one to stay in the EU, all of these opportunities now hang in the balance because of a vote which feels utterly out of our control.
“Both UK and Scottish governments need to make very firm statements soon that long-term investment will not be compromised by the shock referendum result.”
Councillor Joanna Mowat, who represents the city centre, insisted it was “too early to say” what influence the shock result could have on the
But she admitted the upheaval caused by Brexit could put a “natural shackling” on growth and make it “more difficult” to secure sign-off.
She said: “I can understand the concerns and to be perfectly honest, when you have something where there’s negotiations between a lot of different parties, and you introduce massive uncertainty to it, you are changing the environment hugely.
“We will just have to see how this plays out. The parties involved are all committed to Edinburgh. But I think it might be a bit more difficult to put it together.
“What you don’t know with Brexit is that obviously some things are going to happen very quickly, but other things will take a long time to play out.
“There may be a natural shackling of growth because of this, which means that [the deal] happens – but it happens over a longer timescale.”
The council will debate the City Region Deal at its next full meeting on Thursday and insisted the EU result would not affect the plans going ahead.
Bosses hope to deliver the deal by the end of the calendar year – and it is understood it could even be finalised before David Cameron steps down at the Tory party conference in October.
Council leader Andrew Burns said discussions were “ongoing with the UK and Scottish Governments”.
He said: “The deal contains proposals to accelerate growth in Scotland’s capital city and wider regional economy that will benefit Scottish and UK economies while tackling inequalities and deprivation.
“It will also give the region greater autonomy on determining investment priorities and help to identify and deliver appropriate solutions to local issues and opportunities.
“As council leader, my primary concern will continue to be ensuring the best possible quality of life for all the residents of Edinburgh.”
The concerns come as business giants across the city reacted to the referendum result, with the value of the pound plummeting and European stock markets posting double-digit declines.
A spokesman for Virgin Money said: “As a strong, low risk, UK-only retail bank, we believe that we are well placed to manage any uncertainty arising from the result of the EU Referendum. It is ‘business as usual’ for our customers.”
Edinburgh University – one of the city’s biggest employers, after the council and NHS Lothian – insisted future negotiations to leave the EU would have “major implications for the higher education sector as a whole and our core activities of research and teaching”.
And a spokesman for Edinburgh Airport said: “We were clear that we believed that remaining in the EU was the best scenario for Scotland. We will now consider today’s result and take time to speak with our airlines to better understand its impact over the coming months.”