The advantages of a Freeport: Stimulating infrastructure investment
Freeports can play an important role in stimulating infrastructure investment and the renaissance of coastal communities, supporting post-COVID economic recovery, but can also have an impact on inland sites. The most attractive Freeport locations will combine fiscal relief for investors and exporters with agile planning regimes and coordinated infrastructure programmes that dovetail with the Freeport’s existing hinterland. Economic activity in the Solent area (Portsmouth and Southampton) for example has a large ‘multiplier’ effect on the local economy but the national economy benefits too, since the North and Midlands also depend on the trade flows which pass through the Solent.
Good transport links to support Freeport activity directly and to accommodate additional traffic in congested areas surrounding sites will also be critical. Each location will face its own unique challenges. For example, the Port of Southampton, unusually for a port of its scale and importance, is located in a densely packed regional city centre. This presents access challenges with competing demands for road space.
Technology is used to manage freight movements into the container port, which is located close to the M271, but access to cruise terminals conflicts with access to the city centre. On many occasions when multiple cruise ships disembark and embark passengers, the road and rail network come under significant stress. Establishing Portsmouth as a Freeport means this pressure will only increase without significant and immediate investment in new infrastructure.
Freeports undoubtedly have political appeal, sending a strong message to voters that government is prepared to put money into port communities and support manufacturing. However, if the aim is to foster innovation, a complex web of policies will also be required as well as changes to border infrastructure. In addition, Freeports don’t eliminate many non-tariff trade barriers. Exports would still face checks and tariffs. Rules of origin principles would still need satisfying and because a Freeport wouldn’t be seen as being within the customs territory of the U.K. it could fall foul of the principle of territoriality – where intellectual property rights are limited to the territory of the country where they have been granted - complicating future trade negotiations.
For all their limitations though, Freeports do have the potential to reinvigorate neglected parts of the country, improve employment prospects and drive investment in skills and infrastructure and that at least should be welcomed.