Exclusive: Coalition split again as Danny Alexander slams senior Tories for flirting with ‘disastrous’ EU exit

Chief Secretary to Treasury says investors are unsettled and thousands of jobs could be jeopardised

Danny Alexander said foreign companies could abandon their plans to invest in the UK if Tories mounted a crude anti-EU campaign (Dan Kitwood/Getty Images)

Conservative politicians risk wrecking the recovery and threatening hundreds of thousands of jobs by “pandering” to anti-European sentiment, a Liberal Democrat cabinet minister has warned.

Danny Alexander, the Chief Treasury Secretary, said foreign companies could abandon their plans to invest in the UK if Tories mounted a crude anti-EU campaign ahead of the European Parliament elections next May in an attempt to counter the threat from Ukip. In an article on The Independent’s website, Mr Alexander said: “The fact that some senior Conservatives are arguing that Britain should vote to leave the EU is already unsettling investors and threatening jobs and growth. Further pandering to anti-Europeans would be bad for the British economy.”

His pre-emptive strike opens up a second divide inside the Coalition involving Europe. On Monday, Conservative MPs called for Vince Cable, the Liberal Democrat Business Secretary, to resign or be sacked for likening the Tories’ hardline stance on migration from Europe to Enoch Powell’s infamous “rivers of blood” speech. Mr Cable claimed Tory ministers were “in a panic” over Ukip because Romanians and Bulgarians will win the right to work in Britain on 1 January. Mr Alexander said the Liberal Democrats would campaign in the elections as “the party of ‘in’” and be “unashamedly pro-European”.

He disclosed that his party would put “at the heart of our campaign” the threat to jobs in each constituency if the public voted to leave the EU in the referendum David Cameron has promised in 2017.

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The Liberal Democrats will cite research by academics at South Bank University which locates the 3.5 million jobs they estimate depend on British exports to the EU. The 10 parliamentary constituencies with the most “EU-dependent jobs” are: City of London & Westminster (75,423); Birmingham Ladywood (27,499); Leeds Central (23,313); Holborn & St Pancras (20,253); Manchester Central (18,006); Sheffield Central (15,192); Glasgow Kelvin (14,030); Nottingham South (13,443); Islington South & Finsbury (12,824) and West Bromwich West (12,615).

Mr Alexander warned: “A surge in anti-European sentiment in the Euro elections would send a shiver of doubt into the boardrooms of global companies that locate in Britain because we are a gateway to the EU single market.” The Treasury minister said: “With Labour confused on Europe, and the Conservatives divided, only the Lib Dems will be campaigning at the European elections with an unambiguously pro-European message.”

He added: “Pro-Europeans in Britain have been too quiet for too long. Next year is an opportunity to make our argument heard, and the Lib Dems will make sure we take it.”

Despite the widespread expectation that Ukip will come first in the Euro elections, the Liberal Democrats have decided not to try to hide their enthusiasm for the EU project but to make a virtue of it. They will try to appeal to the estimated 20 per cent of the electorate seen as pro-European, including many in the top AB social group and business community.

Nick Clegg, the Deputy Prime Minister, said yesterday that the UK is entering “a critical phase” in its relationship with the EU as he appointed Michael Moore, the former Scottish Secretary, as his adviser on European business. Mr Moore will report by next summer on how businesses engage with the EU and the issues they face.

Tory MPs are incensed by the Liberal Democrats’ approach to Europe and immigration. Nigel Mills, who is leading a campaign for Romanians and Bulgarians to be denied the right to work in the UK for another five years, said Mr Cable was “completely out of touch” with most people. “I think Mr Cable has always had a rather creative interpretation of what collective [cabinet] responsibility ought to look like,” he said.

Philip Davies, another Tory Eurosceptic, said of Mr Cable: “I have nothing but contempt for him and his duplicity. If he feels so strongly he should do the decent thing and resign.”

The National Institute for Economic and Social Research has warned that Britain’s economy will pay a heavy price if the Tories hit their target to reduce annual net migration to below 100,000.

Keeping immigration numbers in five figures would reduce GDP by 11 per cent by 2060, it said –the equivalent of almost £165bn at today’s prices, or about £2,600 for every person in the country.

The think-tank said national finances would suffer because immigrants tend to be younger than the national average and fill gaps in the labour force left by Britain’s ageing population, increasing productivity and tax revenues, while consuming less than the average person in public services such as welfare and education.