Rethink on EU "may hurt economy"

By James Kirkup, Deputy Political Editor

The heads of some of Britain’s biggest companies – including BT and Virgin – have signed an open letter saying that attempting a major change in Britain’s relationship with the EU could “create damaging uncertainty” and put off investment in the UK.

The Prime Minister will later this month make a major speech about Britain’s future in the European Union, outlining plans to seek a “new settlement” that could then be put the British people in a referendum.

Conservatives are pushing for Britain’s membership of the EU to be slimmed down, with many now calling for a return to a simplified “common market” agreement. If such an agreement is now possible, they say, Britain should leave altogether.

Mr Cameron has said he does not want the UK to leave the EU, something he has said would not be in Britain’s best interests.

However, the business leaders today say that Mr Cameron should stick to negotiating for targeted changes on regulations affecting industries like telecoms and energy.

Other EU members are unlikely to accept a wider overhaul of the British relationship, they say, suggesting that could force the UK out of the union.

“We must be very careful not to call for a wholesale renegotiation of our EU membership which would almost certainly be rejected,” the business leaders say.

“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, which are the last things the Prime Minister would want to do.”

The warning echoes remarks from other EU leaders, who have said that there is now doubt about Britain’s future place in the union.

The letter is signed by businessmen including Sir Richard Branson, the chairman of the Virgin Group, Sir Michael Rake of BT, Jan du Plessis of Rio Tinto and Malcolm Sweeting, the senior partner at Clifford Chance, a major law firm.

Other backers include Chris Gibson-Smith, the chairman of the London Stock Exchange and Sir Roger Carr of the CBI. The letter was organised by Business for New Europe, a campaign overseen by Roland Rudd.

Some Conservative critics of the EU suggest that Britain’s most important economic relationships are with countries beyond Europe.

The business leaders’ letter says that the EU remains vitally important to the UK economy.

“The EU remains home to half our exports and is the most powerful trading bloc in the world. Other EU Member States are the main source and destination of foreign direct investment into and from the UK, accounting for about half of our investment,” they write.