Britain's economy better off inside EU: government study

LONDON Mon Jul 22, 2013 12:18pm EDT

Britain's Prime Minister David Cameron speaks with BBC journalist Andrew Marr during a televised interview in the garden of 10 Downing Street in London on July 19, 2013 in this handout photo released by the BBC on July 21, 2013. REUTERS/Jeff Overs/BBC/handout via Reuters

Britain's Prime Minister David Cameron speaks with BBC journalist Andrew Marr during a televised interview in the garden of 10 Downing Street in London on July 19, 2013 in this handout photo released by the BBC on July 21, 2013.

Credit: Reuters/Jeff Overs/BBC/handout via Reuters

LONDON (Reuters) - The economic benefits of Britain's European Union membership outweigh the loss of independence on policy, the government said on Monday in a review that will underpin Prime Minister David Cameron's plan to renegotiate EU ties and hold a referendum.

Cameron rattled many business leaders, EU members and wider trading partners in January when he promised to claw back powers from Brussels and hold a vote by 2017 on whether to stay inside the 28-nation bloc or leave.

His flagship policy has raised the prospect of Britain leaving its main trading partner after 40 turbulent years marked by arguments about the nature of London's relationship with its European neighbors.

France and Germany have signaled they want to keep Britain in but will resist "cherry-picking" EU policies, while U.S. President Barack Obama suggested Britain should try to fix its relationship rather than walk away.

Before the start of renegotiation, Cameron ordered a review of how the EU affects British life across 32 areas, from health and education to the economy, tax and immigration.

The first six reports were published on Monday, looking at areas including the single market, taxation and foreign policy.

Access to a market of 500 million people means Britain's gross domestic product is "appreciably greater" than it would otherwise have been, the review found. However, it noted the opposition to EU regulation and "constraints on policy-making".

The document offered no figure for the gain in economic output due to the single market but it cited six other studies, five of which said membership was worth up to 6.5 percent in extra GDP. The sixth said GDP was 3 percent lower due to the EU.

"Is that trade-off, between cost and benefit, between economics and politics, of overall benefit to the UK? It is not possible to give a simple, unambiguous, and universally accepted response," the review said. "But most observers, and indeed most of the evidence received for this report, answer positively."

'AWKWARD PARTNER'

The British government has described the review as "the most extensive analysis of the impact of EU membership on the UK ever undertaken". It aims to present the views on both sides of the "in/out" argument, rather than reach a verdict on Britain's membership.

Critics say it fuels a perception of Britain as an awkward, semi-detached partner, prone to weighing its ties with Brussels in terms of costs and benefits rather than committing fully to a unification project born out of the ashes of World War Two.

The studies were published with little fanfare as parliament was in summer recess and on a day when a royalist nation was feverishly awaiting the birth of a future heir to the throne, ensuring the EU review is unlikely to hog national headlines.

Cameron's spokesman denied the release was timed to avoid inflaming eurosceptics within his ruling Conservatives.

The prime minister is under pressure to appease rebellious Conservatives who believe Britain could prosper outside the EU. They see the bloc as a bloated, wasteful, meddling bureaucracy that threatens the sovereignty of national parliaments.

The right-wing Daily Telegraph newspaper, which published a leak of the survey, chose to focus on what it called the massive cost burden of EU rules on British business.

Cameron is also threatened by the UK Independence Party, an anti-EU group that took a quarter of the vote in the areas it contested at local elections in May and is aiming for a big score in next year's European Parliament elections.

Poll suggest more Britons want to leave the EU than stay in. The most recent YouGov poll in May said 44 percent would vote to leave, 34 percent would opt to leave, 17 percent were undecided and four percent would not vote.

The government will publish a total of 32 reports between now and the end of the review in 2014.

(Additional reporting by Andrew Osborn; Editing by Paul Taylor)