The UK risks losing single market access after Brexit if the government decides to relax rules to make the City a more business-friendly location, a senior European politician has warned.

Markus Ferber, an architect of the rulebook that binds London’s trading markets to the European Union, has told Boris Johnson, the UK prime minister, that turning the Square Mile into a “Singapore upon Thames” with low tax and low regulation could lead to the EU retaliating by declaring that Britain no longer complies with its rules in key parts of the financial market.