UK's Blair says EU exit would be "monumental error"

LONDON (Reuters) - Prime Minister David Cameron risks committing a monumental error that would threaten Britain's status as a world power if he allows rising anti-European Union sentiment to spiral into an EU exit, former leader Tony Blair said on Wednesday.

Britain's tortured relations with Europe have shot to the top of the political agenda in recent months, with rebellious anti-EU members of Cameron's ruling Conservatives pushing for a new role inside the 27-nation bloc - or even leaving altogether.

But while turning away from Europe may be a vote winner in the short-term, it would isolate Britain, undermine its international standing and damage its economy at a time of shifting global power, Blair said.

"This is the last moment conceivable that we should start talking about leaving... marginalizing ourselves at the very point at which we should be at the centre of things," Blair, who won three elections for the Labour Party, said in a speech at the Chatham House thinktank in London.

Cameron suffered a humiliating defeat in parliament on October 31 when rebels sided with Labour to demand EU spending cuts. He also faces a threat from the UK Independence Party, an anti-EU minority group.

The anti-EU camp sees Brussels as a meddling, wasteful superstate that threatens Britain's sovereignty. A poll on November 17 suggested 56 percent want to leave, against 30 percent who want to stay.

Urging politicians to do more to combat the anti-EU mood, Blair said Britain faced a "real and present danger by edging towards the exit".

"It would be a monumental error of statesmanship to turn our back on it and fall away from a crucial position of power and influence," Blair, wearing a navy suit and tie, told business leaders in the basement of an elegant 18th century townhouse.

'LITTLE ENGLANDERS'

Blair forged closer ties with Europe when he was prime minister from 1997 to 2007, although he did not take Britain into Europe's single currency. Current Labour leader Ed Miliband was accused of hypocrisy and opportunism for suspending his pro-EU beliefs to back the Conservative rebels in parliament.

Conceding that support for a British exit was not confined to "atavistic little Englanders", Blair said it would be wrong to pretend Britain would collapse if it left.

However, he said it was a "delusion" to say Britain could emulate non-EU states like Norway, which is far smaller and has huge oil and gas wealth, or Switzerland, which is "a unique case, politically and economically".

He laughed and brushed aside questions about him being a possible future European Union president.

Some of Britain's neighbors in its biggest trading partner are becoming exasperated with its lukewarm stance.

Italian Prime Minister Mario Monti told Italian TV earlier this week that it was time for Britain "to ask the fundamental question: Do you want to remain in the European Union or not?"

Cameron, trailing Labour in the polls, opposes an "in or out" referendum, talking instead of reworking Britain's EU role and putting that to voters.

Under pressure to clarify his stance on an issue that helped bring down the last two Conservative prime ministers, Cameron is due to give a major speech on Europe in the coming weeks.

(Editing by Guy Faulconbridge)