EU Brexit negotiators have set out a tough line on financial services, ruling out an ambitious trade deal for the lucrative sector and arguing that Europe would benefit from a smaller City of London, according to confidential discussions among the other 27 EU member states.

In a rebuff to the UK, which is seeking to put financial services at the heart of a trade deal with the bloc, an internal EU27 meeting this week concluded that future arrangements should be based on "equivalence" — the limited and revocable access given to third-country institutions — rather than a wide-ranging new pact.

Financial Times