July 21, 2013 6:53 pm

UK to unveil first stage of review into EU powers

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British Prime Minister David Cameron©Eyevine

The UK government will unveil the first stage of its review into the powers of the EU on Monday, after a warning from Japan that Britain risks damaging its economic interests if it leaves the bloc.

Foreign governments, businesses and individuals have submitted evidence to the review on how the EU’s powers affect the UK, as David Cameron pushes for powers to be given back to member states in advance of his Conservatives’ planned referendum on EU membership in 2017.

The first stage of the report – which looks at the internal market, tax and foreign policy – has been kept deliberately low key to avoid inflaming Conservative backbenchers’ passions on Europe at a time when the party is relatively at peace on the issue.

Launched by William Hague, the foreign secretary, last year, the review has turned into a technocratic stocktaking exercise rather than a flashpoint for further Tory demands. It will be presented by Lady Warsi, Foreign Office minister, in a written statement to the House of Lords on Monday, while MPs are away from Westminster.

As part of the review, Japan warned the UK that Japanese investment in the country was dependent on its place in the EU. The Japanese government said it expected Britain to maintain a “strong voice” and keep playing a “major role” in the union.

“More than 1,300 Japanese companies have invested in the UK, as part of the single market of the EU, and have created 130,000 jobs, more than anywhere else in Europe,” it said in its submission to the review. “This fact demonstrates that the advantage of the UK as a gateway to the European market has attracted Japanese investment.”

But Japan lent its support to the UK’s attempt to cut the number of EU regulations, saying its leadership in deregulation had made the EU market more attractive to foreign companies. It also added that it expected the UK to continue to push for an extension of the single market into the service sector.

David Cameron, UK prime minister, said on Sunday that Britain was not alone in wanting to bring back powers from the EU. Speaking on the BBC’s The Andrew Marr Show, he said Enrico Letta, Italian prime minister, had said the approach had “merit” when he visited London last week.

Mr Cameron also suggested the Germans were willing to work with the UK and the Swedish prime minister supported the idea. The prime minister also said the Dutch had produced their own proposals for giving powers back to nation states.

The “balance of competences” review was dealt a blow when Germany and France refused to assist it earlier this year. A French diplomat dismissed it as a “British domestic political exercise”, designed to win over eurosceptic voters.

Angela Merkel, German chancellor, has now indicated she is willing to be helpful as the UK tries to reform Europe, but has made it clear she will not support the unravelling of existing EU treaties.

Stephen Booth, research director at the think-tank Open Europe, said Mr Cameron could persuade Germany to take notice if he created enough momentum behind his proposals with countries such as the Netherlands and Sweden.

Mr Booth said that while he welcomed the exercise, the prime minister now needed to flesh out the Conservative strategy for renegotiating the UK’s settlement with the EU before putting it to a referendum.

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