Brexit freeports: Are new freeports a Brexit dividend? PMs claims fact checked

Rishi Sunak discusses freeports announcement

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Brexiteers celebrated an anniversary this week, with five years having passed since the landmark 2016 vote. They have held on to several perceived benefits since then, including new and incoming trade deals. The Chancellor and Prime Minister have advertised freeports – which the Government hopes to revive – as one of them.

What are freeports?

The Government has touted freeports as a means to attract post-Brexit trade in the UK.

They take shape as airports or on the coast at maritime checkpoints.

Freeports present an opportunity for streamlined trade without tariffs and only require basic documentation.

Are freeports a Brexit dividend?

Rishi Sunak announced the Freeport initiative during his budget earlier this year.

At the time, he claimed the eight new sites across the country could boost trade, adding EU laws would not have permitted their presence.

During yesterday’s Prime Minister’s Questions, Boris Johnson claimed the vote gives the UK “freedom” to “establish eight freeports across the country”.

But they don’t owe their existence to the vote, however, as the UK has established them before.

Between 1984 and 2012, when the UK was still an EU member, ministers established seven.

But they didn’t renew the legislation required to build more, so development stagnated.

Other member states have adopted them as well, including sites in Poland and Ireland.

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But any Free Zones (FZ) have to comply with EU rules.

In 2018, Catherine Barnard, a professor of EU law at Cambridge University, wrote this makes them less lucrative.

She used the example of Ireland’s Shannon FZ, which authorities launched in 1958.

The professor outlined the country’s accession to the EU limited incentives of the arrangement.

State aid rules at the time uncreased corporate income tax from zero to ten percent.

Speaking to Channel 4’s fact-checking team, a Government spokesman played down Mr Johnson’s claim.

They didn’t claim the EU prevented free ports and claimed they would provide “an opportunity to do things differently” instead.

And experts have confirmed there are some benefits, but these are limited.

The Institute for Government (IoG) has found they “encourage imports” by lowering overall costs.

And this provides an incentive for manufacturing businesses, which can secure cheaper imported components.

However, the institute added the evidence of “wider economic benefits” is mixed.

The IoG adds: “There is also a risk that freeports and zones don’t create new economic activity but rather divert existing business into the area with the allure of tax breaks – at a cost to the taxpayer in the form of lost revenue.”

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