Certainty without conviction: why the trade and cooperation agreement failed to reverse Brexit relocations?

The Brexit referendum created a major uncertainty shock for UK firms, reshaping their international investment strategies. The EU–UK Trade and Cooperation Agreement (TCA), implemented in 2021, was intended to restore certainty by codifying trade and investment rules. Using synthetic difference-in-differences and Poisson-based models, this paper examines UK outward greenfield FDI between 2013 and 2023. We find that Brexit drove a significant reallocation of investment into the EU, concentrated in projects that fall outside conventional FDI motive classifications – suggesting that institutional adaptation, rather than standard market- or efficiency-seeking behaviour, drove the relocation. The TCA had limited corrective power: outward flows stabilised but did not reverse. These results suggest that agreements alone cannot restore certainty; regulatory alignment and institutional credibility are essential for sustaining business confidence.