Three months after Britain exited the EU, London on Friday reached a cooperation agreement on financial services with Brussels but despite this first step rivalries between the two sides remain.
The memorandum of understanding, which is still to be signed, will "create the framework for voluntary regulatory cooperation" and establish a regulatory forum which will "serve as a platform to facilitate dialogue on financial services issues", Britain's finance ministry said.
But the culmination of months of tense talks saw both sides agree to push back a decision on the finance sector, leaving it in limbo.
International banks took an early gamble to prepare for the worst and the possibility of a "hard Brexit" by strengthening their European operations, which allowed for a smooth transition when Britain left the customs union.
"The relationship is more one of competition than cooperation at the moment," Sarah Hall, professor of economic geography at the University of Nottingham, told AFP.
While the particulars of the agreement have not yet been released, the full text of the memorandum should be published once it is signed before an end of March deadline set by the UK and the European Union.
The City does not expect an ambitious agreement between the two sides, given the importance of the financial services sector to the British economy: it contributes about seven percent of GDP and 10 percent of the country's tax revenues amounting to £76 billion.
The memorandum is also not anticipated to address the crucial issue of equivalence, which allows London-based firms to operate on the European continent.
For equivalence to be agreed, it has to be granted in 40 separate areas of activity and these can easily be revoked.
For the time being, the EU has only granted two to Britain, while London has granted the EU equivalence in 17 areas. One of these, for example, allows European investors to use British clearing houses and another concerns securities deposits.
Brussels' approach to London in this regard has been less favourable than the 21 equivalences it has with the United States, the 19 it has with Japan and its 15 with Singapore.
Miles Celic, chief executive of TheCityUK, which represents financial services firms, said "securing equivalence determinations from the EU has mutual benefit, especially as economies seek to recover from the pandemic".
He added in a recent statement that the delay already had "the unintended consequence of driving more European financial activity to non-European centres, such as New York".
Hall said Brussels had taken a hard line because the EU fears that the UK will end up diverging from European rules.
"It seems clear that both the UK and the EU are currently working to support their own financial services sectors," she explained.
In an indication of the tensions between the two sides, the Governor of the Bank of England Andrew Bailey has not hesitated to criticise the EU's demands on several occasions.
The loss of the European Economic Area (EEA) cross-border financial passport, which allowed UK companies to offer their services across Europe, has started to have an effect on the UK finance sector.
Amsterdam has overtaken the British capital in European equity trading. Some six billion euros departed London for the EU on the first day of trading after Britain departed the single market.
It is still difficult to assess the damage to Britain, especially as the pandemic has blurred financial outcomes.
However, Britain is already planning its fightback with an easing of stock market rules aimed at attracting start-ups, leading the charge on green finance and pivoting towards markets in Asia while potentially mulling other measures to attract investors.