This Is What We Need To Learn From China To Level Up Brexit Britain

Updated: Jun 19, 2020

Britain Needs Something Special – How to Level Up Britain without Relying on the Crippling Crutch of Austerity.

After Boris Johnson toppled Labours Red Wall in 2019 and claimed victory he declared that it was time to “level up” the UK’s economy after a decade of damaging austerity.

With a no deal Brexit becoming the most likely outcome of the Brexit negotiations and Corona virus leaving our economy in a position from which it may never recover, the current government or any future government will have a hard time ensuring adequate fiscal policy is put in place to truly unleash Britain’s economic potential.


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The minimal gains from austerity came at such a cost that the UK cannot afford to use the same tactics again. Even before the Covid-19 crisis wages had once more fallen below pre-2008 figures, homelessness had increased by 165 percent since 2010, and poverty for those working is at an all-time high.

Special Success.

An economic policy that was first tried in Shannon, Ireland that inspired the now economic super power China is the designation of Special Economic Zones (SEZ). Whilst there is no absolute consensus on the definition of Special Economic Zones, the policy aims to offer regional specific incentives such as simplified customs procedures or tax reductions to attract Foreign Direct Investment and new employment opportunities.

Shannon, Ireland

Special Economic Zones can provide rapid economic growth to cities and even whole regions, as was the case with China’s Hainan province. Previously barren regions can become thriving economic hubs lifting people from poverty through new economic activity and attracting pre-established businesses to relocate.

Tried and Tested Method of Regeneration.

The UK has a long history of utilising SEZ’s to reinvigorate economically dwindling areas such as the Isle of Dogs in London. In 1982 the London Docklands Development Corporation (LDDC) changed an outdated and somewhat abandoned dockyard into a thriving commercial services area. The LDDC offered a variety of incentives which led to the change in the economic culture of the area. The Isle of Dogs is now one of the most sought-after commercial areas in London.

The 'Isle of Dogs' Circa 1980 (Left) and now in 2020 (Right)

No More EU.

Whilst there are over 80 Free Zones within the Single Market the rules on State-Aid limit the extent of said zones unless they are in areas of low GDP, this being the reason why most are located within the new EU member states such as Poland.

By leaving the EU the UK has more it can offer in said zones as it is not restricted by the rules concerning state aid. However, any future trade deal with the EU and the UK is likely to require some limit on the degree of each incentive offered, therefore lessening the apparent deregulatory Brexit advantage. Regardless of an EU deal the World Trade Organisation has its own rules concerning SEZ’s and state aid meaning that their potential as a policy is not limitless.


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The Key to Levelling Up the Forgotten Britain?

SEZ’s have shown to be an important economic tool for the UK in the past but often require additional factors to be present in order to be effective. As a report from the University of Sussex indicates there needs to be surrounding policy measures to ensure that jobs are created rather than diverted and that a broad range of incentives are offered.

However, there is still some hope that SEZ’s could be used to reinvigorate areas such as Grimsby. A city which can offer a degree of pre-established infrastructure through its ports, could allow for an initial boost to local fisheries after the removal of the Common Fisheries policy. This being one of the main factors in the areas economic decline. By offering tax incentives and re-establishing the towns fishing economy there could be the potential for a much needed reinvigoration.

Maybe Not So Special?

SEZ’s are mainly limited by the type of economic activity they seek to help. 80% of the UK’s economy is based within services and SEZ’s have little to do with the largest sector of the economy. It could be argued that SEZ’s could be used to diversify the UK’s economy and breathe new life into forgotten areas like Grimsby, but the policy is not in any way an economic cure all.

What remains is the need for dynamic and adaptable economic policy to steer the UK away from the sheer cliff edge it seems to face. Will the UK correctly optimise the potential of the SEZ, only time will tell.

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