Ivo Josipovic says British exit would have negative impact on trade bloc, as Croatia prepares to become 28th member state

The president of the EU's newest member, Croatia, has urged Britain not to leave but instead to help reform Europe from the inside.

"The reason for us to enter is the same as yours is to stay," Ivo Josipovic told the Guardian during a visit to London before Croatia's formal accession on 1 July, when it will become the 28th member state. "It is a great opportunity. I always ask the critics what Greece would look like without the EU. I am a Euro-optimistic."

Josipovic said his meeting with David Cameron on Thursday left him convinced that Britain would not abandon the EU. "Looking at situation here, I don't think its going to happen. I heard the prime minister … and I read about the plans of your government. It's not anti-European," the Croatian president said.

He added a British exit "would be negative for Europe and for Croatia as well, because UK is an important country with an important economy, with important resources of all kind: the democratic tradition, historical, cultural. So definitely a break with the EU would not be a good thing … I would not like to see it."

Since Croatia applied for EU membership in 2003, the fortunes of both have fluctuated and are experiencing a downturn. Croatia is in recession with an unemployment rate of over 18% and, in the short term at least, membership could worsen the economic situation.

Croatia will erect a tariff wall between it and some of its major Balkan markets to the east. It will mean that many tourists, Russian and Turkish for example, will require a visa to spend their holidays on the Croatian coast, and it could accelerate a brain drain if the nation's best and brightest seek work across Europe.

However, Josipovic argued that EU trade and investment would outweigh the downsides to membership, and he pledged to do more to make it easier for European firms to invest in Croatia.

"It is complicated to come to do business – complicated because of the old mentality and the wish to put everything under norms. But the government is doing its best to change these things," he said. "There are obstacles but day by day we are making it easier."

Josipovic indicated that Croatia would side with the UK in seeking to focus the EU on its basic functions: maintaining a common market, promoting democracy and peace, while cutting back on what he saw as excessive Brussels bureaucracy.

He also said Croatia would be in favour of lifting the arms embargo on Syria "because in our history we were under aggression and couldn't obtain weapons. So equal chances should be provided to both sides."

Croatia has been criticised for the fact that there have been no convictions for the war crimes committed in 1995, when hundreds of Serb civilians were killed during and after Croatia's Operation Storm offensive.

Josipovic argued that investigators faced obstacles looking into crimes committed nearly 20 years ago, especially as previous nationalist governments had been reluctant to prosecute. But he added that the prosecutors would not give up.

"The war crimes investigations will never be suspended. There are no time limits," he said, adding that none of those responsible for the war crimes "will sleep peacefully".