U.K. willing to see EU reforms implemented after referendum

Britain wants an agreement on European Union treaty change as part of a bid to renegotiate its relationship, but it accepts that modifications may not be fully ratified by the time of the referendum, British government sources have told Reuters.

"The U.K. prime minister set out his plans for an (in/out) referendum in the U.K.," read a two-sentence section of the draft summit briefing seen by Reuters. "The European Council agreed to revert to the matter in December."

Thursday's summit marks the formal start of Britain's latest renegotiation of its ties with the EU, the world's largest economic bloc, though U.K. Prime Minister David Cameron is expected only to give a brief outline of his vision as the prospect of Greece defaulting on debts next week eclipses all other risks.

He has promised a referendum on membership by 2017, after seeking EU reforms.

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He is seeking greater flexibility to limit welfare benefits for migrants from other EU states, as well as guarantees that Britain, home to Europe's main financial centre, will retain influence over EU policy despite refusing to adopt the euro.

"Today marks a significant milestone really in the process of saying that it is right to have this renegotiation and this referendum," Cameron said on arrival in Brussels.

"The British people have the final say about whether we stay in a reformed European Union or leave."

EU values 'non-negotiable'

On the eve of the meeting, Queen Elizabeth urged Europe to guard against division in the continent at a state banquet in Berlin where Germany's president declared: "The European Union needs Great Britain."

Leaving the European Union was once considered far-fetched. Two decades ago, British politicians were arguing about whether to join the euro and talk of an exit was the reserve of skeptics on the fringes of both major British parties.

But under pressure from Conservative Eurosceptics and from the rise of the anti-EU bloc the U.K. Independence Party (UKIP) during his first term as prime minister, Cameron promised in 2013 to hold a referendum if he were re-elected.

A referendum vote to stay in Europe would remove a divisive issue from the table, but the run-up to a vote risks opening fissures within the party that helped bring down his Conservative predecessors John Major and Margaret Thatcher.

EU leaders including Germany's Angela Merkel want to keep the EU's second-largest economy inside the bloc. But there is frustration in many European capitals that Britain appears ambivalent towards its EU membership and keeps trying to haggle over the rules.

"There are some British concerns that we should consider but only in a way which will be safe for all Europe," European Council President Donald Tusk said.

"The fundamental values of the European Union are not for sale and so are non-negotiable."

Cameron's gamble

In his election manifesto, along with demands to deal with migrant issues, Cameron said he would also seek to win guarantees that the euro zone will not impose rules on non-euro members, promote more aggressive foreign trade deals and seek reforms to deepen the single market.

Cameron has been advised that some cutbacks on migrant benefits may require changes to the EU's treaties. Since that would take years, he may have to settle for a promise to change rules in the future.

Business chiefs from companies including BT, easyJet and a local cider maker called on Cameron to keep Britain in the EU, saying it was better to reform the EU from the inside.

In a sign of Brussels gearing up to deal with Cameron's demands, Jean-Claude Juncker, head of the executive European Commission, appointed one of the most senior Britons in the EU civil service, Jonathan Faull, to head a new task force to deal with "strategic issues related to the U.K. referendum."

The last time British voters were asked, in 1975, they decided by a two-to-one margin to stay in the European Economic Community, the EU's predecessor. Opinion polls show British voters are more evenly divided now, with a little more than half in favour of membership.