Loss of market access
The main TCA impact on services was to create new trade barriers against UK exports to the EU.
UK service suppliers lost their automatic right to offer services across the EU as of 1 January 2021:
- the UK no longer benefits from free movement of persons and free provision of services.
- UK service suppliers no longer enjoy the ‘country-of-origin’ approach or ‘passporting’ whereby authorisation from one member state gives access to the whole EU Single Market.
- After 31 December 2020, if a UK business is authorised to export services to one member state, it can no longer assume it may export to any other. As a result, service exporters must look at the regulations in each member state in which they want to trade.
In response, UK suppliers:
- may have established a commercial presence in the EU to continue serving EU customers;
- must comply with the varying host-country rules of each member state.
For examples of the new barriers for financial services, professional services and transportation services, please see Table 5.7.
| Table 5.7: Examples of impacts of TCA on UK services exports to EU | |||
|---|---|---|---|
| New barriers – examples | Effects – examples | ||
| Financial services | Loss of financial services passport – cannot provide services from UK to EU customers | ‘Equivalence’ or EU market access to derivatives clearing houses in London expires end-June 2025 | International banks use commercial presences established in EU (Paris, Frankfurt, Dublin etc.) instead of UK |
| FinTech requires physical establishment | UK has less EU equivalence than US, Switzerland, and Singapore | Business, investment and jobs move out of UK | |
| UK loses out on future EU growth | |||
| Reduced tax revenue from financial services sector | |||
| Professional services | UK qualifications no longer recognised at EU level | Professional qualifications recognised differently by individual Member States | Reduced growth in exports to EU |
| Mobility constrained | Eligibility criteria apply for business trips | Higher costs of delivery and reduced flexibility compared to EU suppliers | |
| Patchwork of Member State requirements | Administrative complexity and cost discourages SME exporters | ||
| Transportation services | Road – exit from single internal transport market for hauliers (restricted cabotage) | British airlines and road hauliers now have no right to provide services within the EU, and limited rights for drop-offs and collections on trips from the UK | Commercial presences established in EU (e.g. easyJet in Austria) |
| Air – loss of single aviation area with full freedoms | Impacts on music industry and theatre groups (touring) | ||
Financial services
The TCA impact on financial services, a key UK export to the EU, is described in the table above. The UK and EU had said that they aimed to agree, by March 2021, a framework for regulatory cooperation. This would be done through a Memorandum of Understanding, which would be non-binding. This was eventually established in June 2023. It creates an EU-UK forum for dialogue at a high level that will meet at least semi-annually.
The EU has also granted the UK regulatory equivalence in one specific area: central counterparties. This expired on 30 June 2025, but was renewed. However there was no negotiation – it was purely an EU decision. The EU may also withdraw equivalence determinations at 30 days’ notice. The EU had also granted temporary equivalence settling Irish securities but this terminated on 30 June 2021.
For its part, the UK implemented a Temporary Permissions Regime to support EEA-based firms operating in the UK with a passport. (There was no equivalent EU-wide scheme for UK firms operating in the EU.) However, some Member States, such as Ireland and Denmark, had established temporary permissions in specific financial markets.
Professional qualifications
Another TCA impact on services relates to professional services. UK nationals and EU citizens with UK professional qualifications now need the relevant Member State to recognise the qualifications. Each Member State does this according to its rules for the qualifications of third-country nationals. For UK citizens, this applies irrespective of where they qualified.
When the UK was an EU member, UK and EU citizens with a UK qualification were allowed to supply services across the EU. This covered doctors, nurses, dental practitioners, pharmacists, veterinary surgeons, lawyers, architects and engineers. For the affected professions, certain individuals may no longer be able to deliver services in certain countries in the EU. Some professions, like management consulting, are not regulated in this way and do not face this barrier.
The TCA envisages that the EU and UK may later agree mutual recognition of certain professional qualifications. This would be on a case-by-case basis and for specific professions. The UK may also reach separate bilateral agreements with individual Member State.
The WA protects the mutual recognition of professional qualifications for UK citizens who were living in the EU, or EU citizens who were living in the UK, before the end of the transition period.