Business leaders and pro-European politicians have warned David Cameron that growing speculation that Britain could leave the European Union is undermining the UK's negotiating clout in this week's crucial talks on the EU budget.
The Europhiles want the Prime Minister to rein in Cabinet ministers who have suggested Britain could enjoy a bright economic future outside the EU. They accept that Mr Cameron wants the UK to stay in, but are alarmed by polls suggesting Britons would vote to leave if a referendum were held now.
Kenneth Clarke, the prominent Conservative Europhile and Minister without Portfolio, said yesterday: "It would be a disaster for our influence in global political events, it would be a disaster for the British economy if we were to leave the EU. It damages our influence in these great critical events of the moment if we keep casting doubt on our continued membership."
Sir Roger Carr, president of the CBI, told its annual conference in London: "Businessmen and politicians must keep a bridge firmly in place. As countries of Europe bind together in pursuit of salvation, we must work harder to avoid the risks of isolation. It is essential the voice of British business is loud and clear in extolling the virtues of future engagement, not as a reluctant participant, but as the lynchpin of our wider global trade ambitions."
CBI leaders praised a speech by Ed Miliband, the Labour leader, who warned Mr Cameron was allowing the UK to "sleepwalk towards the EU exit door." John Cridland, CBI director-general, said: "Britain must be part of the single market in a reformed Europe."
Liberal Democrat ministers are alarmed senior Tories are allowing the impression to build that the UK could have a rosy future outside the EU. Today Vince Cable, the Lib Dem Business Secretary, will argue the right course is to reform the EU from within by forging allies.
He will sign a 10-point plan with 12 other EU countries to boost growth by cutting regulations Brussels imposes on business. Mr Cable said: "We are sending a clear signal to the European Commission and European Parliament that we want to inject more practical common sense in the way the EU regulates, supporting rather than hindering enterprise."
Mr Cameron promised a tough stance at a summit in Brussels starting on Thursday on the EU's budget for 2014-20. He will press for a spending freeze in real terms, but other countries want a small increase. There is speculation Britain could live with that if leaders rein in administrative costs of the Commission.
The Prime Minister told the CBI: "I don't think it makes you a bad European because you want a tough budget settlement in Europe. It makes you a good European. I have got the people of Europe on my side in arguing we should stop picking their pockets and spending more and more money through the EU budget, particularly when so many parts of the European budget are not well spent."