UPDATE 2-EU chief Barroso tells UK: Don't turn your back on Europe

Fri Feb 14, 2014 7:14pm EST

By Julia Fioretti and Andrew Osborn

LONDON Feb 14 (Reuters) - European Commission President Jose Manuel Barroso told Britain on Friday to engage with the European Union rather than turn its back on it, saying London should fight to try to change the things it doesn't like.

Prime Minister David Cameron has promised to try to renegotiate Britain's ties with the 28-nation bloc if re-elected next year and to offer Britons an in/out referendum on EU membership by late 2017.

Barroso was visiting Britain ahead of European elections in May in which the anti-EU UK Independence Party (UKIP) is expected to do well and at a time when opinion polls show a slim majority of Britons would vote to leave the EU.

"The right thing to do is not to turn away but to engage and see what we together can do to make it better," Barroso said in a speech at the London School of Economics. "If you don't like Europe as it is, improve it."

Barroso ruled out any attempt to change the EU's rules on freedom of movement, something Cameron has said he'd like to do to stop the citizens of new EU member states from tapping Britain's welfare benefits.

Barroso, who is stepping down after a decade at the helm of the EU executive, said such attempts would be like shooting Europe in the foot.

"An internal market needs all these freedoms, if not we are shooting ourselves in our feet," he said. "We cannot have a single market without the free movement of European citizens."

By underscoring the importance of free movement at a speech in the British capital, Barroso was seeking to send Cameron a message on freedom of movement.

"It was a message that we are not going to compromise on the principle of free movement - this is a big thing in relation to David Cameron's position which seems to be that there has got to be compromise. I would see some divisions looming there," Anthony Giddens, director of the London School of Economics from 1997 to 2003, told Reuters.

END OF EURO CRISIS?

When asked about the euro zone sovereign debt crisis, Barroso said: "The existential crisis of the euro is over."

"When our American partners and friends, including by the way the American president, asked at the most difficult moments, 'Do you think the Germans will stand by the euro?' I have always said to them: 'I am absolutely sure Germany will stand by the euro'," he said.

Barroso praised Germany for its determined support of the euro, evidence, he said, of Berlin's deep strategic allegiance to the European project.

In a question and answer session following his speech, Barroso was asked whether Germany, which has resisted mutualising public debt in the euro zone, would eventually drop its opposition to the idea.

"As to (debt) mutualisation, it is something that Germany will not say no (to) at a later stage," Barroso said, adding he felt German acceptance of mutualisation would come gradually.

"There is already a principle of mutualisation but it is progressive mutualisation only at the end of the process, when all the countries have their own fund for resolution and not before," he said.

"So yes, I believe ... fiscal union will come at the appropriate time for the members of the euro area ... it will take time," Barroso said.

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