'Better to quit' an unreformed EU
Getting out of the EU could be better for Britain than staying in an unreformed union, London mayor Boris Johnson has said.
His comment came ahead of the publication on Wednesday of a report by his senior economic advisor Gerard Lyons, which will argue that British exit from the EU is "definitely a viable option" for London.
Mr Johnson is expected to endorse an eight-point plan for reform of the EU set out by the City banker, which is thought to go beyond the demands so far set out by Prime Minister David Cameron for the renegotiation of UK membership if Conservatives win next year's general election.
The mayor believes that Mr Cameron must be "bold" if he is to succeed in negotiating a better deal for the UK, and should not be afraid of making clear to fellow EU states that Britain is ready to leave if it does not get a satisfactory settlement.
Writing in the Daily Telegraph, the mayor said that he has "no doubt" that Britain can lead a movement for change in the EU, but cautioned that it will have to build on its alliances with reform-minded partners, and win the support of countries in eastern Europe like Poland, which support free trade but have also benefited financially from Brussels largesse.
"When you look at the cost of EU social policy, the stagnation of the EU economies, the continuing absurdities of some Brussels regulation, we are plainly getting to the stage where it might well be better to quit an unreformed EU than to stay in," wrote Mr Johnson.
"As it happens, I have no doubt that we can lead the campaign for reform. But if we are going to succeed, we need to build on our alliances, and to appreciate how our friends on the continent see things."
This will mean recognising not only how eastern European countries have flourished as a result of the net transfer of EU funds to their benefit since accession in 2004, but also how they look to the EU for security in the face of an increasingly unpredictable and threatening Vladimir Putin in Russia, he said.
"We eurosceptics can point out to Poland that EU security guarantees are pretty worthless, and that ultimately protection will come from Nato and from America," said Mr Johnson. "We can observe that in the end, within 10 years, the EU cheques will stop coming in, and that they may eventually feel differently about the anti-democratic elements of the EU system.
"It should certainly be possible to persuade our friends in Warsaw that the EU can be improved dramatically, and that there is no need for regulation and legislation on this scale. We can win these arguments; but it helps to begin any such negotiation with a real understanding of how our friends think and feel."
The Lyons Report is expected to include findings that London's GDP of £350 billion - about a fifth of the UK economy - can be expected to grow to £640 billion by 2034 if Britain stays in a reformed EU oriented towards trade with growing markets in the rest of the world, but would still expand to £614 billion if the UK quit to pursue its own trade-friendly policies.
But if Britain stayed in an unreformed EU, London's GDP could be expected to grow to just £495 billion over the same period, while leaving the EU but failing to adopt a more outward-looking trade policy would limit it to £430 billion.
Mr Lyons told the Sunday Telegraph: "The best economic scenario for Britain over the next 20 years is to be in a significantly reformed European Union.
"But if, as an alternative, the UK leaves the EU on good terms, while adopting sensible outward-looking trading policies, that comes a very close second."
He added: "Britain can only achieve meaningful EU reform if it's serious about leaving.
"Our detailed study shows it's definitely a viable option for the UK to be outside the EU."
The Sunday Times quoted an unnamed source close to the mayor as saying: "Boris favours a renegotiation in which we stay in and complete the common market.
"He believes that is achievable by being bold about that renegotiation and not having that fear about leaving. If voters say that's not enough and we leave, the longer-term aspects of that are not as damaging as people might imagine."
Mr Cameron has said he hopes to be able to recommend voters opt to stay in the EU in the in/out referendum he has promised for 2017, following the planned renegotiation. Mr Johnson's expected comments are likely to increase pressure on him to make clear to EU counterparts that he is ready to recommend withdrawal if the renegotiation fails to deliver the reforms he wants.