The European commission’s Brexit negotiators must strike a “workable” deal with Theresa May’s government to protect the City of London or the economies of the remaining member states will be damaged, a leaked EU report warns.

The document – which has been seen by the Guardian – describes it as critical for the economic health of the remaining member states that the current financial eco-system is not hit in the coming Brexit negotiations.

The paper, drawn up by officials working for the European parliament’s powerful committee on economic and monetary affairs (Econ), warns that UK-based financial services account for 40% of Europe’s assets under management and 60% of its capital markets business. “And UK-based banks provide more than £1.1tn of loans to the other EU member states,” the Econ secretariat’s paper notes.

“If financial services companies choose to leave the UK as a result of Brexit, the consequences should be carefully evaluated.

“A badly designed final deal would damage both the UK and the other 27 EU member states.

“The exclusion of the main European financial centre from the internal market could have consequences in terms of jobs and growth in the EU. It is in the interest of EU 27 and the UK to have an open discussion on this point.”

The warning echoes recent comments from the governor of the Bank of England, Mark Carney, when he claimed there are “greater short-term risks on the continent in the transition than there are in the UK”. Last month, the European commission Brexit negotiator Michel Barnier was also reported to have told MEPs that with the City “there will be a special/specific relationship. There will need to be work outside of the negotiation box … in order to avoid financial instability.”

Barnier later denied making the remarks. “When asked on equivalence I said: EU would need special vigilance on financial stability risk, not special deal to access the City,” he tweeted.

Equivalence is the mechanism whereby the UK’s regulations and the EU’s are to be regarded as of being of equal standing, allowing British-based financial institutions to continue to operate across the EU post-Brexit.

However, the 26-page document, titled Impact of the UK withdrawal on Econ areas of competence, and dated 13 December, notes that an analysis of offering equivalence status to the UK has been designated as a priority by “Econ coordinators”.

It says: “Given the considerable interdependence between the UK and the EU economy and financial systems, it is critical that a workable agreement is achieved that not only maintains high regulatory standards but also delivers growth and jobs across the EU ...

“As an overriding principle, one can assume that after Brexit, the closer the UK remains to established EU regulatory standards, the greater the degree of access the UK can have to the single market – and vice versa, without prejudice to other considerations (eg the principle of the unity of the four freedoms).

“If the UK does leave the single market and thereby resigns from the four freedoms and the jurisdiction of the court, then consideration could be given to tools such as third country/equivalence passporting regime, and this should be taken into account on existing regimes as well as future pieces of financial legislation: eg on securitisation.”

The revelation will provide some reassurance to the secretary of state for exiting the European Union, David Davis, as Britain prepares to trigger article 50 negotiations on 9 March. His claims in recent months that the EU has more to lose than the UK from the City’s sudden departure from the EU’s regulatory framework had been scoffed at by European diplomats.

It will also provide the government with some firepower as the UK parliament debates the bill that will give Theresa May the power to trigger Brexit talks.

Along with the risks the Econ committee sees in Brexit, the report does also foresees some positives for the EU’s policy agenda in the UK’s withdrawal from the European institutions.

The commission has recently proposed a single set of rules for the calculation of companies’ taxable profits in the EU. The common consolidated corporate tax base would ensure that profits are shared between the EU member states in which a company is active.

The report notes: “While it is expected that the UK would oppose the CCCTB proposal (as was the case for the 2011 CCCTB proposal), the UK’s departure from the EU may increase chances of reaching the required unanimity in council – although the UK is not the only member state to have opposed the CCCTB, and opposition from other member tates is likely to remain.”

It also suggests that the UK would have opposed a commission proposal for a “double taxation dispute resolution mechanism”, whereby companies and individuals would have recourse to a pan-European body if they were being taxed on the same profits by multiple national revenue bodies.

“While the UK may support the proposal in principle, it is rather unlikely that the UK would agree to a binding mediation and a decision-making body at EU level,” the document says. “Again, the UK’s departure from the EU may therefore increase chances of the proposal reaching the required unanimity in council.”