Nigel Farage
Nigel Farage has attacked the CBI's report which calls for Britain to the stay within a reformed EU (Reuters)

The leader of the UK Independence Party has launched a scathing attack on the Confederation of British Industry, after the business lobby group said that leaving the European Union would devastate the economy.

Nigel Farage said in a statement that the CBI's report, which was launched at its annual conference, is unrealistic and that leaving the bloc would not mean that Britain has completely turned its back on Europe.

"There is this deeply flawed view that leaving the EU would somehow mean a sudden end to trading with Europe," said Farage.

"The CBI does not consider the more realistic option that if we left the single market and freed ourselves from its red tape and politicised agenda we would still be able to continue to trade strongly with Europe on our own terms.

"Leaving the EU would not mean turning our back on Europe."

Prime Minister David Cameron said there will be a referendum on the UK's membership of the EU in 2017 if his party is re-elected with a majority at the next general election. Cameron called for the referendum after mounting pressure from his vociferous eurosceptic backbenchers, some of whom were beginning to doubt his leadership of the Conservatives.

Farage also criticised the CBI's argument that Britain's relationship with the EU could be revised through negotiations.

"The CBI are proponents of this skewed view that Britain can renegotiate terms with the EU to create a more streamlined relationship," said Farage.

"That would have to involve treaty change but the European Commission President Jose Manuel Barroso has ruled that out.

"Without Treaty change there can be no significant renegotiation at all. We would simply be cutting a few loose threads from a coat that no longer fits.

"We are far better getting out of the EU and building a fresh relationship with our European neighbours. That is what the Government and organisations like the CBI should be looking at rather than clinging to the vain hope that the EU project can be miraculously cured of its ills."

John Cridland, director-general of CBI, takes a very different view.

Cridland talked exclusively to IBTimes UK on camera and offered this view of what was at stake if Britain left the EU.

"I think Britain faces a choice. Do we want to be in and influential or out and have no influence? In a small world, much more interconnected than it has ever been before, individual countries cannot solve the big problems of the day. Living standards, climate change except by working together. So we could survive outside the European Union but our voice would be smaller and our wallets would be thinner," he said.

Meanwhile, Labour is backing the coalition government and CBI's call for a renegotiated UK membership of the EU - though the party still refuses to put its support behind the proposed in/out referendum.

Shadow chancellor Ed Balls will tell the CBI that the EU needs reform, but that the UK should remain firmly on the inside.

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