Top EU negotiator hints at retaining access for City after Brexit

The EU's chief negotiator on Brexit has given a small hint of a compromise to ensure that the rest of the EU continues to have access to the City, it has been reported.

Michel Barnier has suggested he wants the remaining 27 countries to have a "special relationship" with the financial markets of the City in London, according to unpublished minutes seen by The Guardian.

"Some very specific work has to be done in this area," Mr Barnier said, according to the minutes.

"There will be a special/specific relationship. There will need to be work outside of the negotiation box ... in order to avoid financial instability."

A European Commission spokesman told the paper that the minutes, which were created by European parliament officials, did not "correctly reflect what Mr Barnier said".

But the paper also quoted a source who was at the meeting as saying the minutes reflected a "more or less accurate" account of what happened.

The report will encourage pro-Brexit MPs who have long argued that the UK has more leverage in negotiations than first thought.

Mr Barnier's comments reflect some concerns that EU countries will find it more difficult to raise capital if they no longer have free access to the City.

This echoes the views of Bank of England governor Mark Carney, who told MPs on Tuesday that the short-term risks to financial stability from Brexit were now greater for remaining members than for the UK.

"If you rely on a jurisdiction (the UK) for three-quarters of your hedging activities, three-quarters of your foreign exchange activity, half your lending and half your securities transactions, you should think very carefully about the transition from where you are today to where the new equilibrium will be," he said.