UK employers warn against EU exit, call for reforms

Businesses back Britain to stay in European Union: CBI

LONDON (Reuters) — Britain must remain part of the European Union and reform it from within, business leaders told Prime Minister David Cameron on Monday, warning that a possible exit from the bloc could isolate the country's economy.

As Britain gears up for a planned "in or out" referendum in 2017, British employers' group the Confederation of British Industry (CBI), said there was no viable alternative to remaining in the EU but laid out a wish-list of reforms to make membership more beneficial for the country.

"Closing ourselves off from the world cannot be the answer. The stakes have never been higher," said CBI President Mike Rake told employers at the organization's annual conference.

"Britain's role in the world has always been to embrace openness, to seize opportunity, harness global trends and maximize our integration with the world's economies."

Cameron, seeking to put an end to decades of public and political division over Britain's EU membership, has pledged to fight for reform in Europe and to put the changes to voters in a 2017 referendum, assuming he wins an election due in 2015.

Cameron wants Britain to stay in a reformed EU, but cautioned that the referendum outcome was still in the balance.

"It is my judgment that our current consent for remaining inside the EU is wafer thin," Cameron told the CBI conference. "We haven't made the argument enough about why Europe matters and frankly there are lots of things in the European Union that badly need reform."

Divided public opinion over Europe poses one of the biggest obstacles to Cameron winning a second term in 2015. He is under pressure from Eurosceptic lawmakers in his ruling Conservatives to stem a loss of support to the UK Independence Party (UKIP), which calls for an immediate withdrawal from the EU.

A poll for the Daily Mail newspaper in October showed that if a referendum were held in 2014, 46 per cent of people would back withdrawal from the EU and 38 per cent would vote to stay.

"Mission creep"

The macroeconomic think-tank NIESR said on Monday there was a lack of adequate analysis to help inform voters on the economic consequences of Britain pulling out of the EU.

NIESR's director Jonathan Portes said producing such work would be a formidably difficult task, but highlighted the risk that Britain's large financial services sector would suffer and that external investment could be "seriously damaged".

The CBI, which speaks for about 240,000 businesses, said the EU needed a moratorium on new legislation in specific fields such as employment law and also to cut back on "lifestyle rules" governing areas like diet and gambling where it accused the European Commission of "mission creep".

Cameron has yet to specify which areas he wants to target for reform.

The CBI said the EU needed to tie up trade agreements with large markets such as the United States and Japan, estimating they could provide access to new markets worth US$23 trillion. It also urged more focus on trade with emerging markets.

The single European market must also be opened up further, the CBI said. The report singled out the services sector for improvement, saying country-by country differences in the way professions were regulated was preventing many from working across borders. Britain's services sector accounts for nearly 80 per cent of the country's economy.

To achieve these goals, Britain should seek a stronger voice in EU negotiations by sending ministers to meet European counterparts more often and making sure British experts were encouraged to work in Europe, the report said.

The CBI analyzed existing studies to estimate that EU membership contributes between 62 and 78 billion pounds ($95 to $119 billion CAD) to Britain's economic output per year.

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