The much anticipated EU-UK Trade and Co-operation Agreement (TCA), which comprises the bulk of the Brexit ‘deal’ contains over 1,200 pages of provisions covering aspects of the future relationship. These include provisions in relation to trade in goods and services, as well as other matters including law enforcement and criminal justice. Whilst the fact of the deal and the trade aspects may have a positive impact (or avoid a more negative impact) for the business and its operations, for corporate treasurers specifically, does the TCA contain anything which moves the dial?
The short answer is not really. The TCA contains minimal provision for financial services: see the separate blog post What the Deal Means for Financial Services – No Change for Now. In the context of treasury activity, it may also be helpful to note the TCA’s provision for the free movement of capital and payments in relation to transactions falling within the scope of the TCA, so maintaining the pre-Brexit position on cross border activity with the EU in this respect. However, generally, the loss of EU protections that had been relevant in the context of no-deal contingency planning in treasury teams remain relevant in the post-Brexit universe. The commitments in the TCA and related Joint Declarations for further regulatory co-operation and, potentially progress on equivalence determinations by the EU may improve EU market access for UK financial services firms, but nothing is yet certain and the benefits for treasurers are likely to be indirect.
In summary, in terms of the regulatory framework for business as usual, treasurers should therefore be confident in their Brexit planning work done to date, the “no deal” position holds. See, for example, the issues highlighted in our previous blog posts on Brexit and Loan Agreements; Brexit and Bail-in Clauses; Holding Back the Tide? UK MAR and EU MAR to Remain Aligned, for the While; Prospectus Equivalence: It Doesn’t Need to be Mutual; and Timed Out? On-Shoring the EU’s COVID Capital Markets Quick Fixes.
With that in mind, our advice to treasurers is to keep calm and carry on.