Budget 2021: UK announces Britain's eight new freeports post-Brexit

Yahoo Finance Staff and Oscar Williams-Grut
·2 min read

Watch: What are freeports?

UK chancellor Rishi Sunak has confirmed in his budget announcement that the UK will have eight new freeports.

The eight regions selected to be freeports are East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames, and Teesside.

Sunak said the freeport policy is "on a scale we’ve never done before" and will be key in creating jobs and make it easier and cheaper to do business as well as creating jobs.

"I see old industrial sites being used to capture and store carbon, vaccines being manufactured, offshore wind turbines, creating clean energy for the rest of the country, all located within a freeport, with a Treasury just down the road, and the UK infrastructure bank only an hour away," he said.

Freeports already exist around the world. One of the biggest is in Geneva, Switzerland. A 2017 study estimated around SwFr 100bn (£84.4bn, $110bn) worth of art and antiques are stored tax free in Geneva’s freeport. Hong Kong also traces its roots to freeport status.

Freeports are special trade zones that do not function under the same tax rules as the rest of a nation. British freeports will enjoy simplified customs procedures and tax breaks on goods passing through.

It means a company can import products into a freeport without having to pay the UK tax rate on that item. They can then process the item in the UK before exporting it to a third country or selling it into the UK market, where it will face standard taxes.

Watch: Rishi Sunak begins Budget address in House of Commons

The idea is to encourage international businesses to set up factories in free trade zone and to boost trade through Britain’s transport hubs.

READ MORE: Budget 2021: UK chancellor Rishi Sunak unveils recovery plan

As well as tax breaks on imports, businesses investing in infrastructure and operations within freeports will also enjoy tax breaks. The government said this would encourage job creation. Planning laws in freeports will be relaxed to speed up their development.

Sunak has long been an advocate of freeports. In 2016 while still a backbencher he authored a report on the “opportunity” presented by freeports post-Brexit. He argued they could create over 80,000 jobs and boost the economy of the North.

On Wednesday, Sunak promised to do "whatever it takes" to protect the UK economy as he delivered his second budget as chancellor.

Sunak told the parliament COVID-19 had "fundamentally altered” life over the last year.

Sunak announced £65bn ($91bn) of additional COVID-19 support for the economy this year and next, taking total government spending since the crisis began to over £350bn.