EU membership 'crucial' for London

Continued British membership of the European Union is "crucial" to London's future success and the city will suffer if the UK votes to leave in the referendum promised by David Cameron for 2017, according to a new report by a leading business organisation in the capital.

London's business community is committed to remaining within the EU, according to a report
London's business community is committed to remaining within the EU, according to a report

The report for London First warned that the UK cannot take an "a la carte" approach to the EU.

Suggestions that Britain will be able to remain a member while picking and choosing from the EU package were a "chimera", while adopting a Norway-style position outside the 28-nation bloc was unlikely to work in the UK's interest, it said.

On the panel which drew up the report were influential business figures including HSBC chief executive Alan Keir, Barclays vice-chairman Cyrus Ardalan, the chairman of law firm Linklaters Robert Elliott and Nomura vice-chairman Sir Andrew Cahn.

The London and the EU report found that the business community in the capital is "committed to remaining within the EU, in large part because of the economic benefits of the Single Market, and sees great opportunities for Britain to lead a deepening of that market to drive jobs and growth across the country".

Unlike New York and Hong Kong, London does not have a large domestic market, meaning that being at the heart of the European single market is "a crucial part of its success", it said.

Liberalisation of trade driven by the Single Market was seen by most businesses as having "significantly contributed to jobs, growth and rising GDP".

"Business wants the UK Government to take a more engaged role within the EU, in order to drive economic growth and competitiveness, and champion the Single Market," said the report.

Breaking down barriers to the free movement of services was key to London's future development and most likely to happen if the UK was part of the EU.

The report acknowledged that the establishment of common rules to implement the EU's "four freedoms" of movement of goods, services, people and capital had resulted in the pooling of sovereignty and a loss of "independence of decision-making in important areas of national social and economic policy".

But it said that, while immigration from the EU had increased pressure on jobs, wages and public services, the free movement of people was a "vital" part of London's success.

The UK's interest was not to try to secure a "highly unlikely" opt-out from free movement rules or quit the EU, but to take action to deal with the social impacts of immigration.

"The opportunity for London, and British, business is not to threaten exit, but to drive the completion of the Single Market in services and make EU membership work even better in the UK's interests, while vigorously implementing a programme to mitigate adverse social and income distribution effects that undermine the success of the whole," said the report.

"Realising the benefits of the Single Market means accepting its framework as a package: the four freedoms are not 'a la carte'; states cannot pick and choose which best suit their interests as the freedoms work together to create an internal market.

"Britain benefits from exporting goods and services to the EU; Britain, in the round, benefits from the brightest and best who want to work here; and countries that open up their markets to greater competition benefit from rising wealth, as do individuals who have the right to compete for work across Europe."

London First chief executive Baroness Valentine said: "One of the main reasons companies come to London is because the city is a springboard to Europe - the biggest economy in the world.

"If we are left outside the EU after a referendum we would no longer be able to offer that prize to businesses and London would suffer because of it."