Prime Minister David Cameron has promised to renegotiate the terms
of Britain's EU membership and hold an "in-out" referendum by the
end of 2017 if his Conservatives win a 2015 national election.
But many of the most powerful banks, insurers and money managers in
the City of London are increasingly concerned that Cameron's gamble
could allow the country's $2.5 trillion economy, the world's sixth
largest, to slip out of the EU.
TheCityUK, whose members include asset managers, banks, insurance
and accountancy firms, warned that Britain outside the EU would be
shorn of influence, less attractive to investors and vulnerable to
regulations over which London had no influence.
"This is yet more powerful evidence that the UK pulling out of the
EU is the very last thing our country needs. It will kill our hard
earned recovery ... We will be left isolated in the margins and our
future prosperity will be limited for generations," Chief Secretary
to the Treasury Danny Alexander will say in a speech on Monday,
according to advance extracts.
"This rigorous and in depth work clearly shows that leaving the EU
will lead to higher prices, higher unemployment, lower growth and
lower real wages," Alexander, a member of pro-EU junior coalition
party the Liberal Democrats, will say.
London dominates the $5-trillion-a-day foreign exchange market,
trading twice as many dollars as the United States and more than
twice as many euros as the entire euro zone, according to the lobby
"Continued EU membership is essential to this country's economic
wellbeing," said Gerry Grimstone, Chairman of TheCityUK group. "Our
research clearly shows that leaving the EU would seriously damage
economic growth and jobs in the UK."
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A growing number of banks, including Goldman Sachs, Citi and
JPMorgan, have warned a "Brexit" could hurt London's position.
Opponents of the EU say Britain would do better to trade with the
world from outside the bloc. Opinion polls show voters are split on
the issue, with 40 percent wanting to remain in the EU and about the
same proportion saying they would opt to leave.
Law firm Clifford Chance said its research showed that under five
possible scenarios for Britain leaving the European Union, the
financial services sector — which accounts for about a 10th of
Brtain's gross domestic product — would be harmed.
"The success of the UK financial services industry is to a large
extent built on EU Internal Market legislation. To abandon this for
some untried, unknown and unpredictable alternative would carry very
significant risks," said Malcolm Sweeting, a senior partner of
"The UK is a powerful player in the EU and should retain the
capacity to push for reform as a member," he said.
While Cameron has pledged to hold a referendum if he wins in 2015,
the opposition Labour Party has said any Labour government would be
unlikely to hold such a vote this decade.
(Additional reporting by Kylie MacLellan;
editing by Andrew Roche
and Sophie Walker)
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