The ECB’s plans would require clearing houses that handle more than 5% of the market in euro-denominated financial products to be based in the eurozone.

However, the Treasury says the move would contravene European law and it has started proceedings at the European Court of Justice, the BBC reports.

A Treasury spokesperson said: “This decision contravenes European law and fundamental single market principles by preventing the clearing of some financial products outside the euro area.

“The government wants to see this resolved swiftly and without involving the courts, but if necessary will not shy away from continuing legal action to make sure there is a level playing field across the EU for British businesses.”