David Cameron is right: the European Union does need reform. Unemployment is too high across the continent, and the institutions of Brussels and Strasbourg are not accountable enough. The problem is that the government has not said how it will reform, or what powers it wants back, and, if you ask Eurosceptics which powers they want to renegotiate, they mutter vaguely about the working time directive.

As a politically independent business coalition, Business for New Europe has produced its own manifesto of the reforms that the prime minister could and should be asking for, by getting stuck in, not opting out:

• Complete the single market – in services, digital, energy, transport and telecoms
• Focus on free trade – agreements with the United States and Japan could boost Britain’s economy by over £20bn per year
• A competitive Europe – access to capital, cutting red tape for SMEs, smarter regulation
• Enhance the City as the world’s financial centre – respond to the financial crisis with less reliance on banks and more on capital markets, and ensure that non-euro members are not discriminated against and that we protect the single market
• Streamline the EU – focus on what it does best – if decisions can be better taken at the national level they should be. And stop the charade of the European parliament trooping between Brussels and Strasbourg

Angela Merkel did a brilliant job last week in politely slaying the myth of a UK-German deal any time soon. And who can blame her? She knows Cameron has to win the election, do a deal with his own backbenchers, then persuade Germany and 26 other governments to do a deal, and then hold and win a referendum, all by 2017. Good luck with that … Merkel also met with Ed while she was in London last week and I am sure Labour is working hard to work out what deals can be done, not just with Germany but across the EU.

So what should Labour be saying? Here are three broad principles: First, Labour needs a position that is positive about reform and sets out its own reform targets, perhaps some of the ideas above and more on the social dimension, but which does not saddle a Labour government with impossible targets or an unrealistic timetable. Second, Labour should make clear that it is not running away from the issue, and that means a referendum if there is treaty change involving more powers to Brussels. Third, Labour must deal with immigration but without letting that dominate our relations with the world’s largest free trade area of 500 million people. Immigration is a top issue for voters, but the EU is not, and it is not even the biggest issue for United Kingdom Independence party voters. I have not met a Labour member of parliament or parliamentary candidate yet who encounters complaints about ‘Brussels’ or ‘the EU’ on the doorstep.

This is also an opportunity to court a business community that hates uncertainty, and will speak out when risks become real and present dangers, as we have seen with Scotland. The heads of Airbus, Diageo, DHL, Nestlé, Siemens, Unilever, Hyundai, Ford, BMW, Hitachi and Nissan have all said recently that they are primarily here because of the UK’s EU membership.

Let’s ask the sceptics what ‘out’ looks like, just as we have done with Alex Salmond. The Swiss option with all the rules and none of the rights? The Norwegian option where they have to pay more than we do into the EU budget but with no say over how it is spent? Or the Turkish option which only applies to goods when 75 per cent of the UK economy is services. The truth is those who call for these options just want out. And that is not what the British people want. So, yes to reform, yes to a referendum if there is treaty change, but no to threats, timetables and pandering to Ukip.

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Will Tanner is vice-chair of Business for New Europe. He spoke at Campaign for a Labour Majority: How Can Labour Win A Majority in Europe? With Labour Movement for Europe and he tweets @WillTanner1

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Photo: fdecomite