The Government has begun considering leaving the single market for the first time, as the Treasury and the newly created Brexit department hold detailed talks with finance leaders over the best way to pull out of the EU.

A series of discussions have been held between the Chancellor Philip Hammond and top business lobby groups including the Confederation of British Industry (CBI), the British Bankers’ Association (BBA) and City of London Corporation to determine the value of the single market and whether so-called passporting rights are worth “fighting for”.

Officials say the talks have revealed a willingness among some top figures to scrap passporting despite early calls to stay in the single market from some quarters.

Passporting allows UK-based banks to set up branches in any part of the European Economic Area, which includes the EU, plus Norway, Iceland and Liechtenstein, without having to be separately authorised by each nation.