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LONDON (Reuters) - The mayor of London, Boris Johnson, will call for reform of the European Union in a speech on Wednesday and back a report by his economic adviser that says leaving the EU is a "viable option" for Britain if it cannot change, a newspaper reported.
British Prime Minister David Cameron has promised to renegotiate Britain's relationship with the EU ahead of a referendum on membership by 2017 if his Conservatives win a national election next year.
Johnson, often touted as a potential future Conservative leader, is set to outline how Britain should renegotiate its relationship with the EU, the Sunday Telegraph said.
It said Johnson would back a report by his chief economic advisor Gerard Lyons into the future of the capital's economy which shows leaving the 28-member EU would not leave Britain significantly worse off.
"Britain can only achieve meaningful EU reform if it's serious about leaving," Lyons was quoted in the Telegraph as saying. "Our detailed study shows it's definitely a viable option for the UK to be outside the EU."
While British business lobbies have said the EU needs reform, many are worried an EU exit may close British businesses off from the 500 million person single market.
The prospect of Britain quitting the club it joined in 1973 also worries many in the City of London, the financial centre that accounts for roughly one-tenth of the British economy, because it would lose out were trading to move to Frankfurt or elsewhere.
Lyons' report estimates the British capital's gross domestic product would grow to 640 billion pounds ($1.08 trillion) by 2034, from 350 billion pounds now, if Britain stayed in a reformed EU and adopted policies encouraging more trade with the world's fast-growing markets.
If Britain left the EU and pursued its own trade-friendly policies however, the London economy would still grow to 615 billion pounds over the same period, the report will say, according to the newspaper.
"These numbers demonstrate that, while securing significant EU reforms produces the best outcome for London and the broader UK, leaving the EU and pursuing our own trade reforms is far better than the status quo," Lyons said.
Last week the Financial Times reported that incoming European Commission president Jean-Claude Juncker was considering an EU financial services directorate charged with regulating the London financial markets. That is a move some London-based banks fear will tilt EU financial policy towards the euro zone.
Reporting by Kylie MacLellan; Editing by Susan Fenton