Under plans being tabled on Wednesday at the European Commission, a panel of officials would be given sweeping new powers to police the financial sector across the continent, including the City of London, the Telegraph reports.

They would be given “full decision making powers” to impose EU law and to arbitrate disputes between Britain and the eurozone over the risks posed by UK banks.

Decisions taken by the powerful body would be automatically binding unless Britain was able to win the unlikely backing of a majority and overturn them.

Rulings by the panel could create huge costs for the British government and banks if they were ordered to bail out a struggling institution or contribute to cross-border bailout funds, according to the Telegraph.

The plans will also see the European Central Bank new powers of supervision over the banking sector, while the European Banking Authority, the current pan-European bank regulator, will also be radically overhauled and strengthened.