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David Cameron said there will be an in/out referendum on UK's EU membership if the Conservatives are re-elected (Reuters)

London businesses warned that Britain's fragile economy would be damaged further if it pulled out of the European Union because immigration from the single market plugs the skill gap.

The results from a survey by the London Chamber of Commerce and Industry (LCCI) comes on the day that UK Prime Minister David Cameron indicated he was looking to introduce a Bill to pave the way for a referendum on Britain's EU membership.

A report by the LCCI surveyed its members and found most think the UK's EU membership is beneficial to their business, though they want fewer regulations and more of a level playing field between them and their European competitors.

"While the immigration debate is an emotionally charged issue, all evidence suggests that migration benefits London's economy," said LCCI's report, Help or Hindrance? The value of EU membership to London business. "EU workers in particular are net fiscal contributors, paying more in taxes than they receive in public services."

LCCI called for the government to "neutralise the increasingly negative public debate" over migration from the 27-member bloc. A third of migrants in the UK are from the EU, while the rest are from outside.

Immigration is one of the issues at the forefront of UK politics and usually results in heated debates over the economic impact.

According to international survey of migration perceptions by Transatlantic Trends, the 57% of the British public think that there are "too many immigrants" and are more likely to believe that migrants are more of "a problem than an opportunity" than any of the other countries surveyed.

UK Prime Minister David Cameron said if the Conservatives are elected to government in 2015 then there will be a referendum on the country's membership of the EU, a set of institutions viewed by many in the public as a bureaucratic, anti-democratic infringement on Britain's national sovereignty.

A Bill on the referendum could reach parliament before the summer, as Cameron tries to defrost fellow European leaders who are cold to a UK renegotiation. French officials said the UK cannot treat Europe "like an a-la-carte menu".

Cameron said he does not want to leave the EU, but seeks clarity from the British public over what they wish the country's membership status should be.

"Europe and our membership of the EU cause a huge amount of discussion and emotion. We're trying to put out the facts on what business thinks," said Colin Stanbridge, chief executive of LCCI, at the report's launch.

"Emotion is part of politics, so we don't want to take too much of the emotion out of it, but we do want to try and come up with the reality of the business thoughts."

The EU single market is the UK's biggest trading partner. It accounts for around 52% of British trade in goods and services, which in 2011 alone was worth £358bn.

Richard Ottaway, a Conservative MP who chairs parliament's foreign affairs committee, warned that an EU exit would spark a trade war where punitive tariffs and barriers would be imposed on the UK.

"What's the alternative? Outside the EU, negotiating our own terms of trade? Be an independent sovereign nation, calling the shots on our own terms, like Norway and Switzerland?," said Ottaway at the launch event.

"It sounds attractive, but Norway and Switzerland don't call the shots. They pay billions every year for access to the single market."

He said it is better for Britain to be part of a big single market where it can compete on the world stage with clout, because "size matters".

Business is also calling for a level-playing field with EU competitors when it comes to each member state enforcing regulations.

The level of regulation, derived from directives, varies from state to state. Some are better at enforcing them than others, such as the UK, which means foreign businesses can and do get away with breaking the rules, leaving British firms at a disadvantage.

"The UK government needs to ensure that the European Commission effectively oversees the consistent implementation and enforcement of EU regulations across all member states to secure equal access for companies across the EU," said LCCI's report.

There were also concerns about the amount of regulatory red-tape flowing from the EU, particularly in areas of health and safety and employment law.

LCCI called on the government to clarify exactly what areas of the UK's EU membership it will be attempting to renegotiate, and it must do this as soon as possible.
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London Business Boss Colin Stanbridge: EU Referendum is Wrong