U.K. Begins Search for Free Ports as Spending Pledges Mount
PM Johnson’s government is kicking off a search for the locations of new free ports to boost growth in post-Brexit Britain.
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Prime Minister Boris Johnson’s government is kicking off a search for the locations of 10 new free ports in its effort to boost growth in post-Brexit Britain.
As it gears up for its first budget on March 11, the government is launching a consultation on the areas for the new zones with a view to announcing the locations by the end of the year.
Goods entering free ports are exempt from import taxes and tariffs and often benefit from simplified regulations, and the plan “will attract new businesses, spreading jobs, investment and opportunity” across the country, according to Rishi Sunak, chief secretary to the Treasury.
The launch is the latest sign that, after securing the U.K.’s departure from the European Union last month, Johnson is seeking to follow through on other campaign pledges made before his decisive election victory in December. This week, the prime minister is expected to announce his first cabinet changes since the election.
Over the weekend, the government signaled a boost in infrastructure spending focused on northern England, while more announcements could be imminent in the run up to the budget. The Financial Times reported that Johnson is set to give the final go-ahead for Britain’s High Speed 2 rail line as soon as Feb. 11.
The Confederation of British Industry hailed the budget as a chance for a “surge” in U.K.-wide investment, saying it was an opportunity to turn rising optimism into spending that will lift productivity and growth.
“Backed by a pro-enterprise Budget for skills, infrastructure and innovation, business can help kick start a new decade of U.K. growth and job creation,” CBI Director General Carolyn Fairbairn said in a statement on Monday. “And it is investment that will enable all regions of the U.K. to share in rising prosperity.”
By boosting spending in northern England and the Midlands, Johnson is looking to reduce regional disparities and reward areas where lifelong Labour supporters backed his Conservatives in the election. The plan will include 40 million pounds ($52 million) for 5G wireless networks in rural areas and investment in mass transit, according to a government official on Sunday.
Like HS2, free ports aren’t without controversy. The idea has been criticized as backdoor route for tax evaders. The European Commission said last year that free ports were vulnerable to money laundering or terrorism financing.
The weekend also brought speculation that the government may seek to fund spending with taxes on the wealthy. According to the Telegraph, some Treasury officials are evaluating how to raise taxes from owners of the most valuable homes, who are more likely to live in the south. The Financial Times reported Saturday that Chancellor of the Exchequer Sajid Javid is considering a shake-up of pension tax breaks, which tend to benefit high-earners.
“There’s going to be a big investment in infrastructure,” Housing Secretary Robert Jenrick said in an interview on Sky News on Sunday. “This is going to be a budget that tries to level up parts of the country that feel undervalued, and have not been invested in for a long time.”
Still, some have questioned how much of a economic benefit the extra spending can deliver. Last week, the National Institute of Economic and Social Research think tank said proposals were “unlikely to provide a seismic boost to productivity or offset the impact of Brexit.”
To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Tony Czuczka
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