The Government must focus on protecting the most valuable sectors of the finance industry as it negotiates a Brexit deal for the City, a think tank has warned.
Open Europe said the significance of EU passporting rules was exaggerated and has little value to some sectors, such as insurance.
The finance industry has raised concerns about the future of the passporting system, which allows UK banks, insurers and asset managers easy access to EU markets.
In a report published today the European affairs think tank said the Government must prioritise its negotiations on those finance sectors most at risk from uncertainty, such as banks.
Vincenzo Scarpetta, Open Europe's senior policy analyst, said: "The significance of the financial services passport depends on the industry. It is important to business in some sectors, but has much less value in others.
"To claim that the success of the UK as a global financial centre is entirely reliant on the passport is exaggerated.
"In the upcoming negotiations with the EU, the Government needs to focus its efforts on retaining or replicating a passport-like relationship in those sectors where it is most valuable."
What experts have said about Brexit
What experts have said about Brexit
1/11 Chancellor of the Exchequer Philip Hammond
The Chancellor claims London can still be a world financial hub despite Brexit “One of Britain’s great strengths is the ability to offer and aggregate all of the services the global financial services industry needs” “This has not changed as a result of the EU referendum and I will do everything I can to ensure the City of London retains its position as the world’s leading international financial centre.”
2/11 Yanis Varoufakis
Greece's former finance minister compared the UK relations with the EU bloc with a well-known song by the Eagles: “You can check out any time you like, as the Hotel California song says, but you can't really leave. The proof is Theresa May has not even dared to trigger Article 50. It's like Harrison Ford going into Indiana Jones' castle and the path behind him fragmenting. You can get in, but getting out is not at all clear”
3/11 Michael O’Leary
Ryanair boss says UK will be ‘screwed’ by EU in Brexit trade deals: “I have no faith in the politicians in London going on about how ‘the world will want to trade with us’. The world will want to screw you – that's what happens in trade talks,” he said. “They have no interest in giving the UK a deal on trade”
4/11 Tim Martin
JD Wetherspoon's chairman has said claims that the UK would see serious economic consequences from a Brexit vote were "lurid" and wrong: “We were told it would be Armageddon from the OECD, from the IMF, David Cameron, the chancellor and President Obama who were predicting locusts in the fields and tidal waves in the North Sea"
5/11 Mark Carney
Governor of Bank of England is 'serene' about Bank of England's Brexit stance: “I am absolutely serene about the … judgments made both by the MPC and the FPC”
6/11 Christine Lagarde
IMF chief urges quick Brexit to reduce economic uncertainty: “We want to see clarity sooner rather than later because we think that a lack of clarity feeds uncertainty, which itself undermines investment appetites and decision making”
7/11 Inga Beale
Lloyd’s chief executive says Brexit is a major issue: "Clearly the UK's referendum on its EU membership is a major issue for us to deal with and we are now focusing our attention on having in place the plans that will ensure Lloyd's continues trading across Europe”
8/11 Colm Kelleher
President of US bank Morgan Stanley says City of London ‘will suffer’ as result of the EU referendum: “I do believe, and I said prior to the referendum, that the City of London will suffer as result of Brexit. The issue is how much”
9/11 Richard Branson
Virgin founder believes we've lost a THIRD of our value because of Brexit and cancelled a deal worth 3,000 jobs: We're not any worse than anybody else, but I suspect we've lost a third of our value which is dreadful for people in the workplace.' He continued: "We were about to do a very big deal, we cancelled that deal, that would have involved 3,000 jobs, and that’s happening all over the country"
10/11 Barack Obama
US President believes Britain was wrong to vote to leave the EU: "It is absolutely true that I believed pre-Brexit vote and continue to believe post-Brexit vote that the world benefited enormously from the United Kingdom's participation in the EU. We are fully supportive of a process that is as little disruptive as possible so that people around the world can continue to benefit from economic growth"
11/11 Kristin Forbes
American economist and an external member of the Monetary Policy Committee of the Bank of England argues that the economy had been “less stormy than many expected” following the shock referendum result: “For now…the economy is experiencing some chop, but no tsunami. The adverse winds could quickly pick up – and merit a stronger policy response. But recently they have shifted to a more favourable direction”
The report also warned that the banking sector needs at least one year's notice of what access to the EU market will look like when the UK leaves the bloc.
"It is essential for the Government to avoid a cliff-edge situation," Mr Scarpetta said.
"The financial services industry needs maximum certainty on future trade arrangements with the EU as early on as possible in the negotiations.
"Firms have been planning for the worst, and some of them may start putting those plans into motion if uncertainty drags on for too long.
"The UK will need to convince the EU-27 that keeping financial markets open across the Channel is a matter of mutual interest.".
It comes after Sir Jon Cunliffe - the Bank of England's Deputy Governor for Financial Stability - told a House of Lords sub-committee that it would be "highly unlikely" in the short term that the capital's unique financial ecosystem would be recreated in Europe.
However, he said services could shift to New York because its finance industry has the same qualities as London.