The bloc was considering targeting London to warn others of the dangers of leaving, according to Jeremy Browne, the City of London Corporation’s special representative to the European Union, said.
Mr Brown said: “At the heart of everything sits the same recurring dilemma for both the British and the EU27.
“The British must decide between a sovereignty-inspired freedom to diverge from the EU27 rule book and the pragmatic business benefits of maintaining some alignment.
“The EU27 must choose between also leaning towards business-friendly pragmatism or a conscious pursuit of non-cooperation to demonstrate to the potentially faint hearted that ‘Brexit cannot be a success’.”
Brussels was also accused of acting in a “bewildering” and “reckless” manner during EU exit talks by Mr Browne, who was a Lib Dem MP from 2005 to 2015.
He made the reveltions in a series of memos seen by CityAm.
While Britain and the EU both had to make concessions during exit talks, it was Brussels rather than Westminster who were showing the most resistance to making a deal, he claimed.
He said: “There is a technical dimension to their position, but they are also affronted by the idea of London remaining brazenly unaffected.
“The London perspective tends to be coldly pragmatic: ‘if it ain’t broke, don’t fix it’.”
And he hit out at the EU’s general negotiating stance, accusing it of showing disrespect towards Britain and saying the situation would be different if negotiations were with a different country.
He said: “Some brinkmanship is inevitable, but it requires good judgement about where the brink is. The inability of Brussels to comprehend British politics, or read the British character at the most elementary level, is bewildering; reckless even.
“It is true that the British often suffer from similar failings, but the relevant consideration with Brexit is the interaction between the EU and Britain.
“If Croatia was leaving we would all have to brush up on the psyche of the Croatians, but they are not.”
A City of London spokesman said: “These memos are the corporation’s key points from meetings across member states with government representatives, financial institutions and a host of trade bodies.
“These reports, published regularly as part of our policy and resources committee, are intended to make sure UK policymakers and businesses are kept informed of our discussions at these meetings.”