The funds, dubbed JEREMIE (Joint European Resources for Medium Enterprises), have helped more than 1,700 companies in the north of England and created 10,000 jobs in the last six years, but now the future of the funding is at risk.
David Gauke, the chief secretary to the Treasury, told parliament last week that he could not make any guarantees about future EU funds.
Rebecca Durrant, private clients partner at Crowe Clark Whitehall said today that the news was “disappointing”.
“The withdrawal of this important resource could heavily impact the region’s early stage businesses and stall the growth of more established companies, which in turn will affect the jobs market,” she said.
Andrew Hodgson, chair of the north East LEP
We are hopeful that these projects will be honoured by government and deliver important support to businesses and local people before Brexit happens
“That said, our entrepreneurs are resilient and have learnt not to depend on government-backed initiatives. But there is no doubt this it will make securing investment more challenging. There will naturally be more reliance on alternative lenders and business-angel investors to fill the gap.
“It is important that the government acts quickly to reassure businesses in the north that they will be supported, and that we see a genuine commitment to the Northern Powerhouse. It would be a pity if this was a casualty of Brexit.”
The North East Local Enterprise Partnership (LEP) - the body charged with developing the north-east economy - sought reassurance following the result of the EU referendum, that EU funded projects already signed off by the government would continue to be delivered.
To date, the North East LEP area has £89.5m of its £437m EU structural funding committed to projects for the 2014-2020 period.
A further £104.5m worth of projects were put forward to government for approval ahead of the referendum.
The projects already approved will support over 7,400 businesses across the North East LEP area and support almost 30,000 local people into employment and provide those in employment with the skills they need to progress in work.
Andrew Hodgson, chair of the North East LEP said, “We are hopeful that these projects will be honoured by government and deliver important support to businesses and local people before Brexit happens.
“EU funding has hugely benefitted the north-east over the last few decades and we are lobbying government for clarity and seeking assurances that any potential future funding gap will be filled. We urge the government to provide this guidance quickly to ensure opportunities to create jobs and growth are not lost.”
The LEP said there was “no formal Government guidance” on how much funding will be available in the future for north-east businesses and organisations beyond the projects already approved.