However, he also said that financial firms would not be given a general "passport" to the single market.

The European Union could treat some UK financial regulation as equivalent to EU law after Brexit, but would not give financial firms a general “passport” to do business in the single market, the EU’s chief Brexit negotiator said this week.

In a speech at an event in Belgium, Michel Barnier reiterated that once Britain leave the EU on 29 March 2019, its firms would lose the benefits of doing business across a market of 440 million people, according to a report by Reuters.

“We will have the opportunity to treat some UK rules as equivalent, based on a proportionate and risk-based approach, including financial stability, which remains our primary concern,” Barnier said. “Its (Britain‘s) financial services cannot benefit from a passport in the single market nor from a system of generalised equivalence of standards."

The issue of whether UK financial organisations will face regulatory hurdles in accessing the customs union of the EU if it leaves the Single Market has been a major concern for some in the UK market. In the event of a "hard Brexit" where no access is retained, businesses might have to create subsidiaries in the EU bloc to retain access, adding to their costs. On the other hand, continuing Single Market access requires the UK to offer complete free movement for people, and this is seen as one of the sticking points in negotiations.

In his comments, Barnier had described the the integrity of the single EU market as being vital, saying much depended on the scope of regulatory deviation between the EU and Britain after Brexit.

“This is neither punishment nor revenge,” he added. “Just that we are masters of our rules and how they are implemented. The United Kingdom, which wants to regain its autonomy of decision-making, must respect ours.”

If the UK leaves the EU without a deal about Single Market access, the country will fall under the terms of the World Trade Organisation, but WTO rules on tariff and non-tariff barriers do not apply yet to financial services, seen as vital for UK the economy.