Business chiefs warn Cameron of EU exit dangers

LONDON Wed Jan 9, 2013 3:39pm GMT

1 of 3. Britain's Prime Minister David Cameron delivers his keynote speech at the Conservative Party conference in Birmingham, central England October 10, 2012.

Credit: Reuters/Darren Staples

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LONDON (Reuters) - David Cameron will damage Britain's fragile economy if he demands major changes that could threaten the country's relationship with the European Union, business leaders said on Wednesday.

In an open letter, the heads of some of Britain's biggest companies said Britain can't afford to quit a market of 500 million people that buys half of its exports.

Other countries in the 27-nation bloc would probably reject Cameron's attempts to claw back powers from Brussels, isolating the country from its biggest trading partner, they said.

"We must be very careful not to call for a wholesale renegotiation of our EU membership, which would almost certainly be rejected," they wrote in a letter to the Financial Times.

"To call for such a move in these circumstances would be to put our membership of the EU at risk and create damaging uncertainty for British business."

But asked in parliament about Britain's EU role, Cameron repeated his pledge to renegotiate its position.

"There are changes we would like in our relationship that would be good for Britain and good for Europe," Cameron said. He is due to give a long-delayed speech setting out his European policy in mid-January, his spokesman has told reporters.

The rising popularity of the anti-EU UK Independence Party has fuelled talk of a British exit. UKIP leader Nigel Farage said the open letter was a "desperate attempt" by business leaders "to keep their privileged positions", protected from competition by EU regulations.

Trailing in the polls before an election due in 2015, Cameron is under pressure from within his ruling Conservative Party to reclaim powers from Brussels or promise a public vote on Britain's EU membership.


Britain joined the EU's predecessor in 1973, but has stayed out of Europe's single currency zone.

The business leaders said leaving the EU after 40 often turbulent years would damage exports of financial, legal and accounting services. Financial services and insurance make up about 10 percent of Britain's economy, as does manufacturing.

Leaving would raise the cost of exporting and exclude Britain from shaping EU rules, they said, urging Cameron to push instead for EU budget reforms and changes to employment law and to rules governing energy, telecoms and digital services.

Among the signatories were Chris Gibson-Smith, chairman of the London Stock Exchange; Roger Carr, president of the Confederation of British Industry lobby group; Jan du Plessis, chairman of Rio Tinto Plc and Martin Sorrell, chairman of BT Group Plc.

The letter said trading with the EU from outside the bloc - like Switzerland and Norway - would penalise UK companies and mean Britain could miss out on the benefits of a possible future EU free trade deal with the United States.

Around 25 billion pounds of Britain's annual tax revenues could be lost because they come from activity that could easily be moved out of Britain, they said.

Cameron's coalition partners, the pro-EU Liberal Democrats - have criticised his stance, while the opposition Labour Party, which has had its share of divisions over Europe and campaigned for Britain's exit in the 1980s, said Cameron was risking Britain's influence abroad to appease elements in his party.

Former prime minister Tony Blair has said a British exit would be a "monumental error". Peter Mandelson, a former Blair minister and ex-European Commissioner, called it "economic insanity".

($1 = 0.6235 British pounds)

(Reporting by Brenda Goh; Editing by Ruth Pitchford)

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Comments (6)
Raymond.Vermont wrote:
I thought the main thrust of what Cameron was wanting was repatriation of certain powers, (such as social chapters and revising the ECHR/ECoJ’s relationship with the UK) and not a total exit?

As a EU customer,(a high level of contributing one at that) surely thats not beyond the boundaries of reason-ability and something the business leaders should applaud… i.e customer is King!

Jan 09, 2013 3:49pm GMT  --  Report as abuse
stevecole wrote:
The EU needs to change dramatically. Those changes can not be won if we are outside looking in. We need to make allies with those who want to make the EU efficient, transparent and less arrogant and then force these changes through. A weak EU is bad for us in or out.

Jan 09, 2013 4:22pm GMT  --  Report as abuse
btb101 wrote:
Let us be honest in this ‘letter’..
the CBI are actually afraid that if UK withdraws from the EU they will have to start paying their workers real living wages, as opposed to the current practise of minimum wages for the migrant EU workers (which is still 4 times or more the wages they left behind).
If one looks at the current state of those countries within the EU area but not joined to the EU, one can easily see that their countries are not in recession, they are actually thriving.

by leaving the EU, but maintaining trade agreements, but having forged markets in the middle east, far east, india and south america, the UK is in a far better position to make the break with minimal damage to the economy.
if the loss estimates of 25 billion are correct and not just thrown in as scare tactics, the fact that 45 billions would not go in to the EU budget but would actually be saved by the UK government.

The UK people deserve to have the vote on the EU that Cameron dangles so invitingly.. A people should have a choice in a say on their future, or is democracy in the Uk dead?

Jan 09, 2013 6:21pm GMT  --  Report as abuse
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