Commission officials have proposed access to UK-based clearing houses should remain in place until the middle of 2022. Eurocrats are current consulting EU capitals on the plans that would maintain the City of London as the Continent’s leading financial services market. Without special dispensation, London-based clearing houses, which act as the middle man in financial trades, would be blocked from handling euro-denominated derivatives after the post-Brexit transition period expires at the end the of year.

Clearing houses, such as the London Stock Exchange’s LCH and ICE Clear Europe, are some of the most critical institution’s in the global financial system.

The Bank of England and European Central Bank have both warned a cliff-edge cut-off would pose a significant threat to stability across the continent.

London is the world’s most dominant market for clearing derivatives, and oversees the bulk of the €735 trillion European market.

Despite EU governments wanting to capture business from the UK, eurozone firms have warned they will not be able to ramp up capacity enough to replace the British capital in the coming years.

Under the latest plans, access to London would expire at the end of June 2022.

An internal document said: “This decision should enter into force as a matter of urgency in order to ensure legal certainty for clearing members are trading venues established in the Union ahead of the end of the transition period.”

Blocking EU firms from doing business with the City would “create major challenges for Union and Member States’ authoritities in managing financial stability, in particular in times of financial stress”, the document adds.

Just yesterday City sources said the Commission could delay a decision amid anger over Boris Johnson’s plans to rip up swathes of the Withdrawal Agreement with the bloc.

But eurocrats insisted the decision was purely technical and important for the stability of the bloc’s financial services industry.

Clearing ensures that trades made across the financial market are completed if one side of the deal defaults.

Clearing houses place themselves between the buyer and seller of a trade, and are often described as the “plumbing” of the financial services industry.

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“This is in line with what we announced in July’s Readiness Communication.”

Meanwhile wrangling over a free-trade agreement continues in Brussels this week as the process hits a critical point.

Lord Frost, the Prime Minister’s lead negotiator, will travel to the Belgian capital for more showdown talks with EU counterpart Michel Barnier.