Lord Howard 'better out' comment blow for Cameron

David Cameron has been dealt a fresh blow as a former Tory leader said the EU renegotiation has "met with failure" and called for a vote to cut ties with Brussels.

Michael Howard, once a political mentor to the Prime Minister, says he believes Britain should vote to leave to "shake Europe's leaders out of their complacency" - potentially leading to an alternative deal which could be put to a second referendum.

But Chancellor George Osborne issued a warning about the potential impact of Brexit, saying it could cause a shock to the economy.

Lord Howard said Britain "would be sorely missed" if it quit the EU and and suggested "there would be a significant chance that they would ask us to think again" if voters backed Brexit.

The Tory peer said the EU needed greater flexibility, with individual member states given "room to breathe".

In an article for the Daily Telegraph, he wrote: "I had hoped that when the Prime Minister announced his intention to commence negotiations for a new relationship between the UK and the EU he might be able to achieve fundamental reform along these lines.

"When he spoke, at the outset of the negotiations, of the need for fundamental reform, I believe he may have had something of this kind in mind.

"It is not his fault that those efforts met with failure. It is the fault of those EU leaders so mesmerised by their outdated ambition to create a country called Europe that they cannot contemplate any loosening of the ties which bind member states."

Suggesting that a vote for Brexit would force Europe's leaders back to the negotiating table, Lord Howard told the BBC Radio 4 Today programme: "If they were really faced with a British vote to leave they would think again.

"But I could be wrong. And if I'm wrong, it would just mean that they have finally refused to face up to the need for the fundamental and far-reaching reform that David Cameron set out to achieve. And if they are not prepared to reform, I think we are better out."

Mr Cameron has vowed to trigger Article 50 of the Lisbon Treaty, beginning the process to leave the EU, as soon as possible after the referendum if the UK votes to sever ties with Brussels.

But Lord Howard suggested a pause of up to a month for EU leaders to come back with a better deal for Britain.

"I think it is quite likely that during that month they would say let's talk some more, let's see if we can reach a different agreement and perhaps you could have a second referendum. If, after a month or so they don't, then Article 50 would have to be triggered and negotiations to leave would begin," he said.

The former Tory leader insisted that Mr Cameron would be able to remain as Prime Minister even if he was defeated in the June 23 referendum.

"If we voted to leave, the last thing the country would want is for the Government to be distracted by another leadership contest in the Conservative Party," he said.

Lord Howard's intervention came amid claims that the world's most powerful economies are poised to warn against Britain quitting the European Union, following talks with Mr Osborne.

Finance ministers are meeting in Shanghai and the Chancellor is expected to press for the G20 to signal its concerns about a possible Brexit.

Speaking in Shanghai, Mr Osborne told the BBC the economy faces more risks of uncertainty than at any point since the financial crisis in 2008, so it would be the "very worst time" for Britain to take the "enormous economic gamble".

Mr Cameron was also highlighting the economic case for membership on a visit to Wales as he continues to tour the UK campaigning to stay in the 28-member bloc.

He will tell voters that nearly half of Welsh trade is with the EU and the nation will be "better off" if the UK remains in.

Britain's future in the EU is not on the formal agenda for the G20 meeting but Mr Osborne is expected to have talks with counterparts on the sidelines.

Officials at the talks told the Financial Times they expected there would be a reference to Brexit in the official communique.

"I predict it will (be included) because the UK will want it to," one said.