(Adds more comment from minister, HSBC)
By Huw Jones
LONDON, March 24 (Reuters) - Leaving the European Unionwould be disastrous for Britain and harm its economy, StandardLife Chairman Gerry Grimstone said on Tuesday.
"It would be disastrous for London and the UK if the UK wereto leave the single market," Grimstone told a conference on howto maintain Britain's competitiveness as a financial centre.Standard Life is Britain's fourth-biggest insurance company.
Prime Minister David Cameron has promised a referendum onthe Britain's EU membership if his Conservative Party winsnational elections in May.
But Robert Oxley, campaign director of Business for Britain,a eurosceptic business group, said Grimstone was wrong to "joinin the scaremongering that life outside of the EU would bedisastrous for the UK."
"To attribute the City (of London's) success to EUmembership as some do is deeply disingenuous and ignores theongoing damage of EU financial regulation," Oxley said.
Grimstone, who also chairs TheCityUK, which promotes Britainas a financial centre, said the EU's desire to make the singlemarket more effective by creating a "capital markets union"(CMU), would boost Britain.
The CMU aims to make it easier for companies to raise fundsfor growth on markets and ease the bloc's heavy reliance onbanks for money.
Britain's financial services minister, Andrea Leadsom, saidthe government backed EU plans for CMU but that it would "not beshy" of standing up to any measures from Brussels it did notagree with.
Britain successfully challenged a policy from the EuropeanCentral Bank which required clearing houses that handled largeamounts of euro-denominated securities to be based in the singlecurrency area. Unchallenged, it could have forced clearers inBritain, such as LCH.Clearnet, to shift operations tocontinental Europe.
"I am very happy to say the European Court of Justice hasagreed with us. It's the sort of stand the government mustcontinue to take to protect the single market," Leadsom said.
An increase in levies on bank balance sheets announced lastweek in the British government's budget sparked criticism thatit could harm London's competitiveness and could even spur somebanks to shift their headquarters elsewhere.
Douglas Flint, chairman of HSBC declined toaddress this point directly and gave a broader response.
He told the conference that if British government efforts toensure London remains competitive are successful then that wouldmake a "very, very significant contribution to attracting theworld's largest financial services firms". (Editing by Susan Fenton)
HSBC Holdings (HSBA)