WPP Share News (WPP)

* UK business: Britain must be at heart of a reformed Europe * Wholesale changes to UK's role in Europe would bedangerous * David Cameron set to give important EU policy speech By Peter Griffiths and Brenda Goh LONDON, Jan 9 (Reuters) - Prime Minister David Cameron willdamage Britain's fragile economy if he demands major changesthat could threaten the country's relationship with the EuropeanUnion, business leaders said on Wednesday. In an open letter, the heads of some of Britain's biggestcompanies said Britain can't afford to quit a market of 500million people that buys half of its exports. Other countries in the 27-nation bloc would probably rejectCameron's attempts to claw back powers from Brussels, isolatingthe country from its biggest trading partner, they said. "We must be very careful not to call for a wholesalerenegotiation of our EU membership, which would almost certainlybe rejected," they wrote in a letter to the Financial Times. "To call for such a move in these circumstances would be toput our membership of the EU at risk and create damaginguncertainty for British business." But asked in parliament about Britain's EU role, Cameronrepeated his pledge to renegotiate its position. "There are changes we would like in our relationship thatwould be good for Britain and good for Europe," Cameron said. Heis due to give a long-delayed speech setting out his Europeanpolicy in mid-January, his spokesman has told reporters. The rising popularity of the anti-EU UK Independence Party has fuelled talk of a British exit. UKIP leader Nigel Faragesaid the open letter was a "desperate attempt" by businessleaders "to keep their privileged positions", protected fromcompetition by EU regulations. Trailing in the polls before an election due in 2015,Cameron is under pressure from within his ruling ConservativeParty to reclaim powers from Brussels or promise a public voteon Britain's EU membership. PENALTIES Britain joined the EU's predecessor in 1973, but has stayedout of Europe's single currency zone. The business leaders said leaving the EU after 40 oftenturbulent years would damage exports of financial, legal andaccounting services. Financial services and insurance make upabout 10 percent of Britain's economy, as does manufacturing. Leaving would raise the cost of exporting and excludeBritain from shaping EU rules, they said, urging Cameron to pushinstead for EU budget reforms and changes to employment law andto rules governing energy, telecoms and digital services. Among the signatories were Chris Gibson-Smith, chairman ofthe London Stock Exchange ; Roger Carr, president of theConfederation of British Industry lobby group; Jan du Plessis,chairman of Rio Tinto Plc and Martin Sorrell, chairmanof BT Group Plc. The letter said trading with the EU from outside the bloc -like Switzerland and Norway - would penalise UK companies andmean Britain could miss out on the benefits of a possible futureEU free trade deal with the United States. Around 25 billion pounds ($40 billion) of Britain's annualtax revenues could be lost because they come from activity thatcould easily be moved out of Britain, they said. Cameron's coalition partners, the pro-EU Liberal Democrats -have criticised his stance, while the opposition Labour Party,which has had its share of divisions over Europe and campaignedfor Britain's exit in the 1980s, said Cameron was riskingBritain's influence abroad to appease elements in his party. Former prime minister Tony Blair has said a British exitwould be a "monumental error". Peter Mandelson, a former Blairminister and ex-European Commissioner, called it "economicinsanity".