A referendum on Europe after 2015 is a "dangerous gamble," the Liberal Democrat Business Secretary Vince Cable will warn tonight.
On the eve of tomorrow's landmark speech by David Cameron which Conservative MPs are describing as the most important of his career, Mr Cable will launch a pre-emptive strike against the Prime Minister's European strategy. He will argue that, to secure a new deal for Britain, Mr Cameron will have to threaten that the UK would "walk out" of the EU if he failed to achieve his objectives.
Conservative pressure on Mr Cameron increased last night when Liam Fox, the former Defence Secretary, said the referendum he plans must offer "a clear in/out choice." Although Mr Fox would prefer to secure a more open and flexible relationship with the EU, he said Britain could leave it "without fear".
In a long-planned speech to businessmen in Oxfordshire, Mr Cable will urge "reform" from within the EU rather than "renegotiation". Reflecting his private talks with foreign companies considering investing in the UK, he will say they are potentially being driven away by doubts about Britain's EU membership.
"Uncertainty is the enemy of investment," he will say. "At a time of extreme fragility in business confidence, such uncertainty would add to the sense of unresolved crisis [in the eurozone] and weaken Britain's ability to deliver more reform inside the EU... This is a terrible time to have the diversion and uncertainty which the build up to a referendum would entail."
The Business Secretary will warn that Britain's efforts to preserve the EU single market could prove "next to impossible" if it tries to disengage from some commitments and threatens to block EU integration in other areas to secure concessions. "That seems to me a dangerous gamble to make".
Mr Cable's fears about job-creating investment were echoed yesterday by Ed Miliband, who told the Commons that the referendum plan would result in "a 'closed for business' sign hanging around Britain" for five years.
Accusing Mr Cameron of "losing control" of his party, the Labour leader said: "When it comes to Europe, it's the same old Tories –a divided party and a weak Prime Minister".
Mr Cameron accused Labour of having nothing to say on the substance of the issue. Previewing his speech, he said: "Millions of people in this country, myself included, want Britain to stay in the EU but they believe there are chances to negotiate a better relationship." He said that he would seek the "full-hearted consent of the British people" for a fresh settlement.