EU wakes up to 'Brexit' nightmare after British vote

Brussels (AFP) - Europe confronted on Friday the cold certainty of an unprecedented British referendum on EU membership after David Cameron's election win, with two years of tough talks ahead to prevent a so-called "Brexit".

Work was to start quickly at the European Union's headquarters in Brussels after Cameron, whose Conservatives secured a surprise majority, confirmed his intention to let Britons vote in 2017 on whether to stay in or leave.

Cameron says he wants Britain to remain in the 28-nation bloc, but only if he can secure reforms such as changes on migration and benefits, and the repatriation of certain powers to London.

European Commission chief Jean-Claude Juncker -- who as head of the EU's executive arm would be responsible for drawing up plans for any changes -- quickly offered an olive branch.

"I stand ready to work with you to strike a fair deal for the United Kingdom in the EU and look forward to your ideas and proposals in this regard," the former Luxembourg prime minister said in a short statement.

Juncker had opened the door last week to minor changes to the EU's treaties, but his spokesman insisted Friday that the bloc's four key principles including freedom of movement were "non-negotiable".

The other freedoms are movement of goods, services and capital.

EU President Donald Tusk skirted around the issue but called on Cameron to keep "making the case for the UK's continued membership."

But Federica Mogherini, the EU's foreign policy chief, said the British election result was "completely reassuring".

"It's a surprise and I would say it's good news in terms of stability, as one year ago we were all worried about instability and the lack of governability," she said during an event in Florence, Italy.

- 'Getting real' -

Televisions in Brussels were tuned in to Cameron's Downing Street victory speech after an election result that ends five years of Conservative coalition with the europhile Liberal Democrats.

While it concentrated on domestic issues, he stressed that he would live up to his pledge to hold an in-out referendum "on our future in Europe."

Cameron's strident but still vague demands for reform have however put him at odds with many other European leaders including German Chancellor Angela Merkel, the continent's power-broker.

Many in Brussels had been hoping Cameron's Labour rival Ed Miliband would win, given that Miliband, who resigned Friday following his defeat, had ruled out an EU referendum.

"The British are wrong if they think their partners are ready to pay a heavy price to keep them in, especially if that price deprives the whole European project of any meaning," one European diplomat told AFP in Brussels.

The British election result is the starting gun for bruising negotiations over the coming two years, beginning with a European summit in June at which Cameron is likely to set out the reforms he wants.

Previous summits have seen Cameron isolated and red-faced as he pushed his agenda, but analysts say this time it may be different.

Mats Persson, director of the Open Europe think-tank, said that after months of "posturing" Europe would now take the referendum seriously because it was a "new event, we have never seen something like that before. It's huge event for the EU."

"It's now getting real for people," Persson told AFP.

- Brexit risk reduced? -

The sheer scale of the Conservative victory could increase Cameron's negotiating power, analysts and officials said.

The failure of Nigel Farage's eurosceptic UK Independence Party to win more than one seat was a particular boost to Cameron, meaning that he may not have to pander so much to the anti-EU wing of his own Conservative Party.

"The risk of Brexit is strongly reduced today because Cameron has just received a full mandate and his position in his party has been strengthened," a senior European diplomat in Brussels told AFP.

Jan Techau, director of the Carnegie Europe think-tank said Cameron "could now be a strong leader of his own party, which is key for the coming nasty Brexit debate."

The referendum was now "winnable", a top EU official told AFP. "We certainly have work to do... I think that will start pretty quickly."

Another Brussels source said that "if we have to have a package of adjustments to the four freedoms, give him them".

An Eastern European diplomat meanwhile said they hoped Britain would stay in to keep the balance of the EU.

"This is very important for Germany. What will happen with the balance of power between the north and south? Brexit would totally favour the south," the diplomat said.

"No one can imagine a EU without the UK."