'Hard Brexit' would end passporting rights for City of London

British financial institutions would lose 'passporting' rights which allow them to conduct business across the EU if the country left the single market.

Jens Weidmann, president of the Bundesbank, told the Guardian: "Passporting rights are tied to the single market and would automatically cease to apply if Great Britain is no longer at least part of the European Economic Area.”

He said he expected some businesses to reconsider their London location after the country does leave the EU, and relocate to another financial centre within the trading block such as Frankfurt, but he does not anticipate a mass departure.

“Of course several businesses will reconsider the location of their headquarters. As a significant financial centre and the seat of important regulatory and supervisory bodies, Frankfurt is attractive and will welcome newcomers. But I don’t expect a mass exodus from London to Frankfurt.”

A ‘hard Brexit’ is favoured by eurosceptic members of the Conservative party, who want a withdrawal from the single market in order to secure an end to the free movement of people.

A lobby group, Leave Means Leave, was formed by backbench Brexiteers to push for a complete exit from the EU.

Foreign secretary Boris Johnson, a leading figure in the Leave camping during the referendum, also endorsed a new cross-party campaign, Change Britain, to ensure the country gained control over “laws, borders, money and trade” after Brexit.

Prime Minister Theresa May has refused to disclose the government's position on access to the single market, although Brexit Secretary David Davis said “simple truth is that if a requirement of membership is giving up control of our borders, I think that makes it very improbable”, but Downing Street has since distanced itself from his comments.