The EU has ruled out government demands for special treatment for the UK financial sector.
According to a diplomatic draft seen by The Times, the EU is to rule out a future agreement allowing free trade in financial services for a much more restrictive arrangement that can be revoked at short notice.
The draft sent to the European government said: “The aim should be reviewed and improved equivalence mechanisms, allowing appropriate access to financial services markets, while preserving financial stability, the integrity of the single market and the autonomy of decision making in the EU.
“Equivalence mechanisms and decisions remain defined and implemented on a unilateral basis by the EU.”
The decision comes as a snub to Chancellor Philip Hammond, who recently stated that equivalence was “wholly inadequate for the scale and complexity of the UK-EU financial services trade”.
He said: “The EU’s model of equivalence, which is unilateral and withdrawable on no notice in some cases would not work.”
Subscribe to our newsletter to receive breaking news by email.