Europe: Referendum Risks 'Chilling' Economy

Uncertainty over the UK's position in the European Union will threaten the British economy, Nick Clegg has claimed in a stark warning to David Cameron.

The Deputy Prime Minister suggested the ongoing question about the UK's relationship with the EU could have a "chilling effect" on business and growth.

Highlighting the faultlines in the coalition over Europe, Mr Clegg urged the Prime Minister to be "very careful" to avoid deterring investors and jeopardising jobs.

His comments come days before Mr Cameron is due to deliver a key speech on Britain's place in Europe in Amsterdam on Friday.

Mr Clegg said: "I do not think we should do anything to jeopardise our leadership (in Europe) and we certainly should not do anything which would have a chilling effect on jobs in this country.

"We should be very careful at a time when the British economy is still haltingly recovering from the worst economic shock in a generation to create a very high degree and a prolonged period of uncertainty because in my view uncertainty is the enemy of growth and jobs."

On Friday, Mr Cameron is expected to unveil plans for a referendum on a new settlement with Brussels, although he has already ruled out a straight in-out question.

He insists he is not "blackmailing" European allies by demanding the repatriation of some powers and says he is "optimistic" about achieving change from within.

But Mr Clegg, a renowned europhile, warned that the Prime Minister's stance could stop businesses putting money into the UK.

"If you are an investor investing in the United Kingdom to create jobs here, it is unnecessary to create a high degree of uncertainty which might actually chase away that investment and might diminish the number of jobs in this country," he told the BBC.

"I don't think it is wise to add to that with a degree of uncertainty which I believe would have a chilling effect on jobs and growth in this country.

"For me the priority remains jobs and growth, not an arcane debate that will go on for years and years and years."

He added: "I obviously do not agree with the premise that we can, on our own, unilaterally, simply rewrite the terms of our membership of this European club."

The Deputy Prime Minister said the public should only get a say if there was a transfer of powers to Brussels - and denied breaking a pre-election promise to hold a popular vote.

"If there is a new treaty and if that new treaty asks new things of the United Kingdom - in other words a transfer of powers from Westminster to Brussels - then of course we would have a referendum at that point," he said.

During the election campaign, Mr Clegg declared that he remained "unambiguously committed" to a plebiscite on the question of Britain's membership of the EU when the issue next arose.

"When that comes back on the agenda then I think the only honest question to ask is the fundamental question: are you in or are you out?" he said in April 2010. "I would argue fervently that we should be in there to lead."

Mr Cameron has said he wants Britain to stay in the EU but is seeking a fresh settlement which he plans to put to a public vote after 2015.

Business leaders have echoed Mr Clegg's concerns and are keen to retain access to the EU's single market where Britain does around half its trade.

The Deputy Prime Minister said he had not seen a copy of Mr Cameron's speech but insisted he too would set out plans for a referendum on any new treaty.

No one was asking for "a referendum out of nowhere", he insisted.