Britain's membership of the European Union is "crucial" to London's future success, and an exit from the political bloc will hit the UK's competitiveness and jobs, a major business group has warned.
A new report for London First said that the UK could not take an "a la carte" approach to being in the European Union and rubbished suggestions that Britain could remain a member while picking and choosing parts of the EU package.
The report comes as investment managers warned about the impact to the UK's tax revenue if Britons vote to leave the European Union in the referendum promised by prime minister David Cameron for 2017.
London First's report was drawn up by a panel of business leaders including HSBC chief executive Alan Keir, Barclays vice-chairman Cyrus Ardalan, the chairman of law firm Linklaters Robert Elliott and Nomura vice-chairman Sir Andrew Cahn.
The London and the EU report found that the business community in the capital is "committed to remaining within the EU, in large part because of the economic benefits of the Single Market, and sees great opportunities for Britain to lead a deepening of that market to drive jobs and growth across the country".
Unlike New York and Hong Kong, London does not have a large domestic market, meaning that being at the heart of the European single market is "a crucial part of its success", it said.
"Business wants the UK government to take a more engaged role within the EU, in order to drive economic growth and competitiveness, and champion the Single Market," said the report.
Breaking down barriers to the free movement of services was key to London's future development and most likely to happen if the UK was part of the EU.
"The opportunity for London, and British, business is not to threaten exit, but to drive the completion of the Single Market in services and make EU membership work even better in the UK's interests, while vigorously implementing a programme to mitigate adverse social and income distribution effects that undermine the success of the whole," said the report.
"Realising the benefits of the Single Market means accepting its framework as a package: the four freedoms are not 'a la carte'; states cannot pick and choose which best suit their interests as the freedoms work together to create an internal market.
"Britain benefits from exporting goods and services to the EU; Britain, in the round, benefits from the brightest and best who want to work here; and countries that open up their markets to greater competition benefit from rising wealth, as do individuals who have the right to compete for work across Europe."
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This comes as the Investment Management Association, which represents UK fund managers, warned that a British exit could see a "material loss" in tax revenue for the UK treasury.
An IMA spokesperson said: “The most important benefit for UK citizens is choice – they have access to a wider selection of investment funds and investment management services.
“If we could not so easily sell UK funds within the EU, then more funds would re-domicile to other Member States. For every £1 billion of funds under management re-domiciled or established elsewhere, the UK Exchequer would lose £700,000 per year in employment taxes and other revenues, and we would lose jobs.
“As regards investment management services, about £1 trillion of assets are managed in the UK on behalf of non-UK EU clients. That equates to about £3 billion of revenues for our industry - and the jobs and taxes that flow from it for the UK. We would not lose all of that, but even half of it would be a material loss for the UK.”
Antony Hook, Liberal Democrat European election candidate for the South East, said: “The IMA is an organisation helping millions of Britons make the most of their pensions and savings. They have made it clear that there is a significant economic upside to being part of Europe – not least for the jobs and revenue that flow from the asset management industry.”
Liberal Democrat chief secretary to the Treasury Danny Alexander said: “The Investment Management Association have shown that we need to be in Europe to protect British jobs and strengthen our economic recovery. They are clear – if we leave the EU it could reduce the choice available for British savers when investing their hard won savings, and British jobs and tax revenues could be threatened by businesses re-locating to other countries. Why play chicken with these jobs?
“Nick Clegg showed in his debates with Nigel Farage that Liberal Democrats are the only party of IN, the only party making the case at these European elections that we should not sacrifice a single British job to eurosceptic extremism. Labour and the Tories are quite frankly missing in action, failing to defend the national interest.”