Move to increase EU integration may reduce size of free trade zone

London's banking and financial services face a tough choice.  Stay inside the main EU integration and face stiff regulations that will make London uncompetitive in the world.  Leave the world and retain its competitiveness outside of Europe but face penalties that prevent European nations from using the London market.  From the New York Times:

Meanwhile, the emergence of an ever more clear-cut two-tier Europe, with much greater integration among the 17 euro zone nations on issues like banking and financial services, is putting a strain on Europe’s unified economic space, and could ultimately threaten London’s status as Europe’s financial capital.
“Deeper integration in the core would come with disintegration in the E.U.’s periphery and shrink the single market,” writes Sebastian Dullien in a separate paper, also for the European Council on Foreign Relations. In other words, it could undermine the one part of the European bargain that Britons actually seem to like. . . .