Government’s post-Brexit ‘freeport’ scheme tipped to make ‘no material effect’ on UK economy

A Stena Line ferry in Belfast Port; Niall Carson

A Stena Line ferry in Belfast Port; Niall Carson - Credit: PA

The government's plan to build free trade zones - known as freeports - across Britain after Brexit will have 'minimal material effect' on the UK economy, a report has claimed.

Researchers from the University of Sussex's UK Trade Policy Observatory (UKTPO) found that the economic upside of building 10 freeports across the country was so small that it would be 'almost non-existent'.

Under the initiative, which is being championed by chancellor Rishi Sunak, firms can import components and other pre-manufactured goods to be built in the UK and only pay a lower tariff on the finished product. The cost-saving of wavering duty on raw goods, known as 'tariff inversion', is expected to boost trade through British ports.


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But in research commissioned by UKGT the scheme is found to support less than one percent of British importers.

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'The fundamental thing is that the trade benefits of a freeport are almost non-existent,' mentioned Peter Holmes, a UKTPO fellow who co-authored the report.

'The only benefit might be in some sort of enterprise or urban regeneration zone — but that has nothing to do with the 'port' aspect.'

The Treasury has long touted 'duty diversion' as a catalyst for boosting trade after Brexit but the initiative, introduced in May, will have a minimal effect compared to economic benefits of remaining in the EU single market.

Researchers said that of the 20 most imported goods - accounting for roughly 40% of the UK's import market - a whopping 12 were already duty-free while none had a levy greater than four percent.

They said pet food and dairy producers were one of the few industry sectors set to capitalise on the programme. Combined, those businesses make up 0.6% of UK's overall imports.

Up to 21 ports across the UK are vying to become a free trade zone.

Last month, cabinet minister Michael Gove announced a £700 million funding package to prepare British ports for Brexit.

In July, the government also launched its latest media blitz to prepare businesses for the end of the Brexit transition period on December 31, costing taxpayers £93 million.

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