Britain should tell EU it is leaving, Conservative former minister says

LONDON, Nov 24 (Reuters) - Britain should notify the European Union it intends to leave the bloc so that it can negotiate a new settlement ahead of a 2017 referendum on membership, a former minister in Prime Minister David Cameron's cabinet was quoted as saying on Monday.

Cameron has promised to renegotiate the terms of Britain's membership before holding an in/out referendum by 2017 if he is re-elected in a May 2015 national election.

But Owen Paterson, a cabinet member for four years before being dropped in a summer reshuffle, said Cameron should fight the May election on a promise to formally notify the EU that Britain wants to leave the bloc, The Times newspaper reported.

Paterson said Cameron should pledge to invoke Article 50 of the Lisbon Treaty, a clause which sets out how a member could leave the EU, to give Britain a stronger hand in talks on a pre-2017 settlement.

"They give us a new deal or we can vote to leave in the 2017 referendum," Paterson told The Times newspaper in an interview, saying that such a move would give the bloc two years to come to a new agreement with Britain.

The comments ratchet up the pressure on Cameron who last week saw a second defector from his party win a special election for the anti-EU UKIP party, which favours an immediate British exit from the EU and far lower immigration.

Many investors and some major allies fear Britain could be slipping towards an exit from the European Union as Cameron becomes ever more Eurosceptic to try to see off the threat from UKIP.

In an embarrassing defeat heralding a possible fragmentation of Britain's two-party system in next year's national election, UKIP won a second parliamentary seat last week.

Paterson, who served as Cameron's Northern Ireland Secretary before taking over as Environment Secretary in 2012, also said Britain would have more influence if it left the EU's political structures.

"If we were an independent nation we'd be able to have our own seat on the world trading bodies," he said.