British businesses must urge the UK government to stay in a reformed European Union, says the head of the country's leading independent employers' organisation.

Sir Mike Rake, the president of the Confederation of British Industry (CBI), will make the demand on 20 May at the organisation's flagship annual dinner to mark its 50th anniversary.

The dinner, attended by a 1000-strong audience of senior business leaders and politicians, will be held at London's Grosvenor House Hotel, with IBM and ManpowerGroup as strategic sponsors.

Rake will say: "Business welcomes the fact that several weeks of negotiations to form a new government were avoided. And business will very much welcome the continuity the Prime Minister has shown in his choice of ministerial appointments.

"Today, we are at a critical moment for growth. The election may be over, but risks remain – at home and abroad. Our fiscal deficit is still the highest of any major EU country. And on the global stage, headwinds persist. From structural challenges in the Eurozone, to Greece's on-going debt issues and conflict in the Ukraine."

However, he will credit the Tory-Liberal Democrat coalition for tackling the deficit and pursuing pro-enterprise policies, for example by reducing the headline rate of corporation tax, saying: "With our political future more certain and our economic outlook more positive – now is the time to tackle remaining challenges to growth."

Britain 'must choose between retreat to the past or shaping the future'

Rake will urge business leaders to support British EU membership, arguing the time is ripe for reform.

"Business has increasingly spoken out on this crucial issue and the time has come to turn up the volume. Speaking out clearly and in a language which people can understand.

"In the months to come, our country will have to make its own choice. A choice between openness and isolation. Between shaping the future or retreating into the past."

EU flag
Britain is debating the cost and benefit of staying in or leaving the EU Reuters

He will add: "The question is not whether the UK would survive outside the EU, but whether it would thrive. No one has yet set out a credible alternative future to EU membership. The current alternatives are not realistic options – little or no influence and the obligation to comply with EU principles whilst still paying most of the costs.

"Norway is the 10th highest contributor to the EU budget – despite not being a member – and it took Switzerland nine years to negotiate and implement partial access to the Single Market."

Rake will acknowledge public concerns around immigration, but will point out that "skilled migration" is part of the solution.

"We need to keep up-skilling our population at home and attract the best and brightest European and global talent. Many businesses – and our National Health Service – could not operate without skilled migration."

In late 2013, the CBI published a report saying that the benefits of EU membership were worth £3,000 for every UK household. This figure was disputed by eurosceptics, and during the election campaign, Ukip leader Nigel Farage said EU membership cost Britain about £20bn year.