London Mayor Says U.K. Has Nothing to Fear From EU Exit

London Mayor Boris Johnson said the U.K. could thrive outside the European Union and should be prepared to leave the bloc if Prime Minister David Cameron fails to win sufficient changes to the way it functions.

The best option for Britain, where Cameron has pledged a referendum on membership by the end of 2017, would be to stay within a “reformed” EU, Johnson said today, according to extracts of a speech e-mailed by his office, and the U.K. should be able to achieve that.

“But if we can’t, then we have nothing to be afraid of in going for an alternative future,” Johnson said at Bloomberg’s European headquarters in London. “It is crucial to understand that if we can’t get that reform, then the second option is also attractive.”

London’s economy is set to grow by an average 2.75 percent a year in a reformed EU or by 2.5 percent in a managed exit with the U.K. remaining open to the bloc and the rest of the world, according to a report by Johnson’s economic adviser, Gerard Lyons, published today entitled “The Europe Report: a Win-Win Situation.” That compared with 1.9 percent under the status quo or 1.4 percent growth if Britain follows inward-looking policies after leaving the EU.

Johnson, who is among the favorites to succeed Cameron as leader of the Conservative Party, is setting out his position on an issue that has dominated and divided the party for 30 years. The party needs to balance the views of voters -- who have shifted support to the anti-EU U.K. Independence Party, which campaigns to leave the bloc -- with those of business leaders, who want Britain to remain inside the 28-nation EU.

Finance Views

A 2013 survey by TheCityUK, a bank lobby group, found that 84 percent of finance industry leaders want the U.K. to remain a member of the EU.

The U.K. would seek a “generous exit” that allowed it to maintain the free-trade advantages of membership, according to Johnson. Fewer regulations, along with new trade agreements with partners such as China, Brazil, Russia, Australia and India, would spur growth, Johnson said, according to the text of the speech.

The economy is already growing at the fastest pace among the Group of Seven nations. That growth and a sluggish recovery in the euro area means the U.K.’s euroskeptics are less easily dismissed than before, said Alan Clarke, an economist at Scotiabank in London.

“The recovery has given us the opportunity to puff up our chests towards the rest of Europe,” he said in a telephone interview. “But I’d still be a bit nervy about the idea that the U.K. is better outside than in.”

Close Poll

Cameron has promised the EU referendum if he is re-elected next year and said he will campaign for the U.K. to stay in if he can successfully renegotiate the terms of membership and push through reform. That ability will depend on the willingness of fellow EU leaders such as German Chancellor Angela Merkel and French President Francois Hollande to grant him the reforms he needs to convince his party he has succeeded.

Polls on British voting intentions in an EU referendum are close, with a YouGov poll on July 17 and July 18 finding 39 percent in favor of leaving the EU and 38 percent against.

Johnson, who is in his second term as Mayor of London and made his name as the Daily Telegraph’s Brussels correspondent between 1989 and 1994, has criticized U.K. policy in Europe before. Earlier this year he attacked the double standards of Margaret Thatcher, for many Tories the quintessential anti-EU crusader, and her successor John Major while he was working in Brussels.

`Blatant Hypocrisy'

“What was going on then was naked and blatant hypocrisy by the British government because they were continually pretending to the people of this country that they were standing firm in Brussels against attempts by the other countries and the commission to harmonize and regulate everything, whereas in reality they would go out there and they would always do deals and capitulate,” Johnson said in a video interview for the Telegraph. “Even Mrs Thatcher, euroskeptic, famously rebarbative about the European Union, even she and some of her immediate advisers could be quite tricksy about what was really going on.”

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