UK says review of EU shows bloc must relinquish power 'in many areas'

LONDON (Reuters) - The European Union must relinquish power "in many areas" in favour of member states, British Foreign Secretary Philip Hammond said on Thursday, announcing the end of a two year review of his country's relations with the bloc.

Prime Minister David Cameron has promised to renegotiate Britain's ties with the EU to try to claw back powers to London from Brussels before holding a membership referendum in 2017 if he wins a national election next year.

Publishing the final reports in a civil service investigation into how the EU affects British life in 32 areas from health to immigration, Hammond said the review had found the 28-nation bloc needed to reform itself to be more open, competitive, flexible and democratically accountable.

"They underline the need for the EU to focus on those areas where it genuinely adds value," said Hammond, a possible leadership contender for the Conservative party who has said Britain must be prepared to exit the EU if it can't overhaul it.

"There are many areas where action can and should be taken in member states rather than at the EU level," he said, saying the reports provided further evidence of the need for a change in Britain's relationship with the EU.

(Reporting by Kylie MacLellan; Editing by Andrew Osborn)