The City of London has warned that new European regulations could ride roughshod over the interests of the UK, where the financial services sector employs more than 1m people and generates billions of pounds in income.

In an outspoken attack on the accord signed last week to create an EU regulator, the City of London Corporation said the Brussels’ legislation posed a dangerous risk to the success of the economy.

Stuart Fraser, chairman of the Corporation’s policy and resources committee, said: 'We have lost the broader argument about ceding control of UK rules to the EU, though we are happy that some concessions have been made.

'We now still have a situation where binding arbitration dictated by Brussels could overrule the UK’s Financial Services Authority.'

Daily Telegraph