Exclusive: The Role of Free Zones in the World’s 10 Largest Economies — Part 1: Europe

FTZ News: Germany, Britain, France, Russia and Italy sit among the world's ten largest economies, ranking third, fifth, seventh, eighth and ninth respectively by nominal GDP, according to International Monetary Fund projections. Each has experimented, at some point over the past two centuries, with carving out pockets of territory where normal customs rules don't apply. What those experiments look like today, though, varies more than most people assume — and in one case, a country widely thought to have such zones doesn't have any at all.

Germany (3rd)

Germany's story starts the earliest and runs the longest. When Hamburg joined the German customs union in 1888, city officials fenced off a large stretch of the harbor and declared it duty-free — the Freihafen, which became the model free port for much of the industrialized world over the following century. By the 1920s, free zones dotted the German coastline: Cuxhaven, Altona, Kiel, Bremerhaven, Königsberg, Brake, Geestemünde, Nordenham. Most are gone now. Emden and Kiel lost their status in January 2010. Hamburg's Freihafen closed at the start of 2013 as European single-market rules made the old carve-outs increasingly redundant. What's left is small. The free zone at Cuxhaven is set to be abolished at the start of 2027, leaving Bremerhaven as Germany's only remaining free port. No agency publishes a figure for what share of German trade or output moves through them, and given how far their footprint has shrunk since Hamburg's heyday, that absence of data is probably telling in itself.

Britain (5th)

Britain took a different path, dropping free zones entirely before reviving them under a new name. Seven operated between 1984 and 2012 — Belfast, Birmingham, Liverpool, Prestwick, Sheerness, Southampton and Tilbury — until the government simply stopped renewing the licenses and shifted its attention to enterprise zones, a broader incentive scheme that still covers 61 areas across England, Wales and Scotland. Then came Brexit, and with it, freeports returned. There are 12 now: eight in England, two in Wales, two "green freeports" in Scotland, spanning 52 tax and customs sites. The government's own 2025 progress report credits the program with roughly £158 million in seed capital spending, close to £1 billion in private investment unlocked for site preparation, and 2,671 hectares of land brought back into use. Independent reviewers have been less certain about what any of that adds up to nationally. The Institute for Fiscal Studies, the UK Trade Policy Observatory and the Office for Budget Responsibility have each noted, at various points, that freeports' effect on the broader economy may be too small to separate from background noise — and that some of the activity they attract might simply be shifting from somewhere else in Britain rather than appearing out of nowhere.

France (7th)

France is where the research turns up something unexpected. Despite ranking as Europe's second-largest economy and a major trading nation, France has almost no customs-style free trade zones of any commercial significance. Marseille's historic free port, once a fixture of Mediterranean trade, was abolished in 1817 and has stayed that way. What France calls a "zone franche" today is something else entirely: urban enterprise zones, created in three waves starting in 1997, expanded in 2004 and 2006, meant to spur hiring at small businesses in disadvantaged neighborhoods rather than facilitate international trade. There are roughly 100 of them. Marseille alone has two, credited with more than 13,500 jobs over twelve years, though France's national statistics agency has found that some of that reflects companies relocating from just outside the zone boundary rather than genuinely new activity. Proposals to build an actual port free zone near Marseille have surfaced repeatedly in French policy debates. None has been adopted. France does maintain two small free zones: one at the Port of Verdon near Bordeaux and a regional free zone in French Guiana. Both are limited in scale.

Russia (8th)

Russia runs the largest and fastest-growing system of the five. The current framework dates to a federal law signed in July 2005, replacing an earlier generation of 1990s-era zones that researchers have described as largely hollow — vehicles that attracted little real foreign investment before the law's overhaul. Roughly 53 special economic zones existed as of a mid-2024 government review, up from 16 around 2009 and 33 in 2020; of those evaluated, 33 were rated effective and 19 moderately so. Alabuga, founded in 2006, remains the largest and best-performing single zone. Russian officials have put the system's annual contribution to GDP at around 1.2 trillion rubles, with more than 2 trillion rubles of real investment carried out in the past five years against roughly 6.5 trillion rubles in total pledged commitments. More than 230 new investors registered in 2025 alone, bringing in over 1 trillion rubles that year, according to government figures. Separately, Russian authorities have reported the formation of a free economic zone in territory they call the Luhansk People's Republic — an occupied region of Ukraine whose status under Russian control is not internationally recognized — where 79 companies reportedly signed on as participants in 2025. That activity falls outside the federal SEZ framework proper and is best counted apart from it.

Italy (9th)

Italy's system is the youngest of the five but has moved quickly since a 2024 overhaul. Eight separate special economic zones were created in 2017 under the Gentiloni government, each built around a port plus adjoining industrial land, covering regions from Abruzzo to Sicily and Sardinia. On January 1, 2024, all eight merged into a single zone — the ZES Unica per il Mezzogiorno — covering every municipality across Italy's eight southern regions. From November 20, 2025, the zone was expanded to include parts of Marche and Umbria. The pace of investment picked up almost immediately. The old eight-zone system had authorized about 1.9 billion euros in investment over roughly seven years. The unified zone matched and exceeded that in its first eleven months, authorizing about 2.4 billion euros through 415 single permits, while 6,885 companies claimed tax credits worth 2.55 billion euros — enough that Rome had to double the program's funding after initial demand came in nearly six times over budget, according to Italian government figures. Total investment tied to the zone's first year topped 7 billion euros. Funding is set at 2.2 billion euros for 2025 and 2.3 billion euros for 2026, with the program extended through 2028.


Taken together, the five cases don't point toward free zones playing a central role in any of these economies. Russia's system is the largest in scope and the fastest-growing by the numbers available; Italy's is young but drawing investment quickly; Britain is mid-experiment with a second generation of freeports whose national impact independent reviewers still can't confirm; Germany is managing the tail end of a system that once set the global standard; and France, for all its size, has chosen not to run one at all. None of this resembles the role free zones play in economies like the United Arab Emirates, China or Singapore, where such zones account for a meaningful share of national exports. The five cases differ sharply in scale, design and maturity. Publicly available data do not provide a consistent basis for measuring their independent contribution to national trade or output, making direct comparisons difficult. In several of these economies, the zones are designed primarily to support particular regions, industries or investment projects rather than to serve as a separately measured pillar of national trade.