Brussels and London play down talk of Brexit breakthrough

But No 10 said it was speculation and talks were ongoing, while the EU's Brexit negotiator Michel Barnier hit out at "misleading" accounts.

A report in The Times suggested a tentative deal had been reached on all aspects of a future partnership on services and the exchange of data.

Such a deal, it was claimed, would guarantee UK companies access to EU markets as long as domestic regulations remained broadly aligned with those set by Brussels.

Sterling went up nearly one per cent versus the dollar overnight at $1.28.

But Theresa May’s spokesman dismissed the report out of hand, saying: "It's time for everybody to draw a deep breath. This is speculation. While we continue to make good progress, agreeing new arrangements for financial services negotiations are ongoing."

In March, Philip Hammond warned the EU's existing regulatory equivalence regime was "wholly inadequate for the scale and complexity of UK-EU financial services trade", in part because it allowed Brussels to unilaterally end the relationship with little or no notice.

The suggested blueprint would appear to address some of those concerns with neither side able to unilaterally declare regulations have fallen out of equivalence and block access to their markets without first going through independent arbitration and providing a notice period significantly longer than the current 30 days.

But Mr Barnier said there had been "misleading press articles today on Brexit and financial services".

He went on: "Reminder: EU may grant and withdraw equivalence in some financial services autonomously.

"As with other third countries, EU ready to have close regulatory dialogue with UK in full respect for autonomy of both parties."

There was also confusion in Westminster over how close an overall Brexit deal might be after Dominic Raab hinted a deal could be done within three weeks.

The Brexit Secretary was accused of a "messy U-turn" after he indicated he expected an EU withdrawal deal finalised by November 21, only for his department to later insist there was no set date.

In a letter to the House of Commons Brexit Committee, Mr Raab wrote: "I would be happy to give evidence to the committee when a deal is finished and currently expect November 21 to be suitable."

But, after the letter became public, the Department for Exiting the European Union said there was “no set date for the negotiations to conclude" and November 21 "was the date offered by the chair of the select committee for the Secretary of State to give evidence".

Labour’s Sir Keir Starmer was scathing, saying: "What a mess."

Downing Street would not be drawn on the date, with the PM’s spokesman saying: "We want to get a deal as soon as possible and that's what we're working to achieve."

Asked about the November 21 date, Jeremy Hunt, the Foreign Secretary, said: "It's entirely possible that we could make progress, enough progress, by then."

Meanwhile, Brussels and London appeared to be engaged in an exercise of playing down and playing up the prospects of a deal.

In the Belgian capital, Sabine Weyand, the EU’s chief Brexit official Weyand told diplomats “nothing new” had emerged from recent talks with Mrs May’s chief Brexit adviser Olly Robbins. She said: “Nothing has changed; there are no new ideas.”

Another EU insider claimed Brussels was “flabbergasted” by talk of an imminent breakthrough while another said any November summit was now “very unlikely” unless Britain gave way on all of the outstanding issues.

In the UK capital, however, despite the Brexit Department’s clarification on Mr Raab’s November 21 comment, Whitehall insiders suggested it “reflects current thinking”.

It was also suggested the PM had indicated to business leaders at a private meeting that a deal was almost done. One said Mrs May was “very optimistic” about prospect of deal being reached “pretty soon”.

Separately, one minister confided that the two sides were “pretty close to a deal...That’s what people in negotiation are saying”.