CBI closes ranks behind Major in EU squabble

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The leadership of the CBI yesterday closed ranks behind John Major over his stance on Europe despite fears that it could rebound badly on business interests and stengthen the hand still further of Tory Euro-sceptics.

Sir Colin Marshall, in his first appearance as CBI president, said he "strongly agreed" with the Prime Minister's policy of non-cooperation with Brussels, adding: "I would not have thought that the position the PM took is particularly going to encourage any more the efforts of the Euro-sceptics. I do not anticipate this tactic is going to have an effect on business."

He was backed by the outgoing CBI president, Sir Bryan Nicholson, who described the stand-off between Britain and its EU partners as little more than a spat and criticised the press for whipping up hysteria with the use of emotive headlines .

"We entirely understand why he has taken the stance he has and the business position has to be one of sympathy," Sir Bryan said. "All clubs have spats. These things happen and an assertion of your national interest within the club is quite legitimate."

He rejected suggestions that Mr Major's stance could render Britain a "semi-detached" member of the European Union or allow the Euro-sceptics to hijack policy on Europe.

But he acknowledged that the "noise and flak" in the background from anti-European wing of the Tory Party was "singularly unhelpful".

Yesterday's monthly meeting of the CBI's ruling council was told by one Japanese-owned firm that coverage of the row with Europe had prompted worried calls from Tokyo to ask whether the UK was contemplating withdrawal from the European Union.

Sir Bryan, who used his speech to the CBI'S annual dinner on Tuesday night to attack the "churlish xenophobia" of the Euro-sceptics, said the Prime Minister had been correct to draw a line in the sand over the continuing beef ban.

Both he and Sir Colin insisted that the pursuit of national interests by individual members states was legitimate and not inconsistent with a desire to remain in the mainstream of Europe. The CBI said that it stood four-square behind Mr Major.