Vince Cable Warns David Cameron 'Dangerous' EU Referendum Will Damage Economy

Vince Cable has sided with Labour leader Ed Miliband in warning David Cameron that any pledge to hold a referendum on Britain’s membership on the EU would damage the British economy - and deepened the coalition split on the issue.

In a speech to business leaders on Thursday, the Lib Dem business secretary will say it is a “terrible time” to have the “diversion and uncertainty” which build up to a referendum would entail.

“Uncertainty is the enemy of investment. At a time of extreme fragility in business confidence such uncertainty would add to the sense of unresolved crisis and weaken Britain’s ability to deliver more reform inside the EU,” he will say.

“Any reopening the whole question of British membership creates additional uncertainty at a time when there is already fragile economic confidence in the wake of the financial crisis.”

He will add: “I have never met or heard of a business that exports widely, within or beyond Europe, that thinks it would be better to be doing this from outside the EU.”

Cable’s intervention signals a ratcheting up up of the Lib Dem attack on Cameron’s increasingly eurosceptic position, although The Huffington Post UK understands that the Lib Dems have no plans to make a formal, Leveson-style, response to the prime minister's speech on Friday.

"We want to give the Tories enough rope to hang themselves with," a senior Lib Dem source told HuffPostUK.

On Monday, Lib Dem leader Nick Clegg said that talk of a referendum would have a “chilling effect” on jobs and growth.

“We should be very careful, at a time when the British economy is still haltingly recovering from the worst economic shock for a generation, to create a very high and prolonged period of uncertainty,” the deputy prime minister told BBC Radio 4’s Today programme.

Cable’s comments come the day before David Cameron’s much-anticipated speech on Britain’s future relationship with the EU, although HuffPost UK understands that the business secretary’s speech was in the diary long before the date of the prime minister’s address was known.

Cameron is expected to use his speech in the Netherlands on Friday to commit the Conservative Party to a holding a referendum on Britain’s 'renegotiated' relationship with the EU - if, that is, the Tories wins the next election outright.

Ed Miliband launched a similar attack to Cable's on Cameron during prime minister's questions on Wednesday.

"At a time when one million young people are out of work and businesses are going to the wall, what is the Prime Minister doing? He has spent six months preparing a speech to create five years of uncertainty for Britain,” he said.

Taking aim at eurosceptic Tory backbenchers, Cable will use his speech on Thursday evening to say that it will be “next to impossible” to safeguard the UK national interest in the Single Market if London tries to disengage from its existing commitments.

“The eurosceptic calculation is that British permission is necessary for closer integration- via treaty change- and that this permission can be traded for the negotiating objectives. That seems to me a dangerous gamble to make,” he will say.

“There are many in Europe, notably in France, who would be happy to see the back of the UK (whatever that may mean in practice) and even the UK’s allies on market reform (notably Germany) have limited political capital to spend getting a more favourable arrangement for the UK.”

Cable’s view that Tory eurosceptics are risking with Britain’s position inside the Single Market mirrors comments made by veteran europhile and Conservative minister Kenneth Clarke, who told the Financial Times yesterday that any referendum would be a "gamble" that could lead to the UK leaving the union.

On Thursday evening shadow foreign secretary Douglas Alexander will also deliver a speech on Britain and the EU, outlining Labour’s European vision, rejecting a referendum and slamming Cameron's eurosceptic position.

“For many in his Party, getting David Cameron to commit now to an in/out referendum is not about securing consent. It is about securing exit,” he will say.

“The gap between the minimum the Tories will demand and the maximum our European partners can accept remains unbridgeable.

In words that are almost identical to Cable’s, Alexander will say committing to a referendum “risks up to seven years of economic uncertainty which could deter potential investors and undermine the prospects for recovery”.