EU negotiators plan to use the threat of restricting access to European financial markets in talks with the UK

Brussels will threaten to block the City of London’s access to European markets in an opening salvo of post-Brexit trade talks in the new year.

EU chiefs will also warn Downing Street that they could put up barriers to data flows vital to British commerce.

In two weeks European governments will begin internal talks with, according to a restricted document, “possible decisions on adequacy [personal data] and equivalence [financial services]”.

The two decisions will be central to the EU’s negotiating strategy because both will be crucial for the British economy in terms of data flows critical for smooth commerce and the future of financial services, which account for 7 per cent of Britain’s output.

EU negotiators will use the threat of unilaterally restricting or limiting