Britain should negotiate a return to a "single market" relationship with the European Union, and then put it to a referendum, London Mayor Boris Johnson has said.
Mr Johnson said this "pared down" relationship was both "essential and deliverable", but said if voters did not like it they could opt to leave the EU altogether. It was "high time" that the British people had a chance to vote on the issue.
Britain should abandon the goal of being "at the heart of Europe" and instead demand a "common sense" relationship, which sees the UK involved in the single market and the decisions governing it, but preserves its freedom to set its own interest rates and taxes and abolishes much of the bureaucracy coming from Brussels, said the Mayor in a keynote speech in London's Docklands financial centre.
Mr Johnson rejected warnings that a renegotiated relationship with the EU would turn the UK into a backwater, insisting that London would remain "the heart of the world economy", trading freely not only with Europe but also the emerging economic giants like India and China.
And he set himself on a collision course with Prime Minister David Cameron and Chancellor George Osborne over their support for closer fiscal union within the eurozone, which he denounced as "anti-democratic and therefore intellectually and morally wrong".
He also risked offending Germany by saying that the government of Greece appeared to have been "taken over" by Chancellor Angela Merkel, which was not "the outcome the Greeks were hoping for in 1944", when the Nazi occupation of the country was ended.
Speaking at Thomson Reuters, Mr Johnson said the UK could establish a similar position in relation to the EU as that of Norway or Switzerland, with the added advantage of remaining within the councils which determine the rules of the single market.
The euro had shown itself to be "a calamitous project", as many in Britain had warned, and plans for fiscal and banking union would "make a bad situation worse", said the Mayor. With EU politics increasingly consumed by projects to establish closer union between the eurozone states, "we can no longer pretend that this country is at the heart of Europe". But he described this situation as "liberating", as it offered the chance for the UK to "seize the moment to ask the British people to define themselves and their future in Europe".
The Prime Minister should use the opportunity of upcoming treaty changes to convene an inter-governmental conference in which "we bring Britain's membership in line with what people want", he said.
"Boil it down to the single market. Scrap the social chapter. Scrap the fisheries policy," said Mr Johnson. "We could construct a relationship with the EU that more closely resembled that of Norway or Switzerland - except that we would be inside the single market council, and able to shape legislation... That is a renegotiated treaty we could and should put to the vote of the British people."