Nick Clegg warns an EU referendum will have a 'chilling effect' on economy
The battle lines over which powers should be returned from Brussels to Britain will be drawn today when Conservative Eurosceptics list their demands for the "new settlement" with the EU promised by David Cameron.
But Nick Clegg and a new all-party pro-European campaign, which includes Kenneth Clarke, poured cold water on the prospect of Britain winning a major repatriation of powers, accusing the Eurosceptics of making unrealistic demands.
Mr Cameron is expected to welcome the Fresh Start group's "manifesto for change" ahead of his landmark speech on Europe on Friday, when he will offer a referendum after the 2015 general election on the deal he aims to win in negotiations on a new EU treaty.
The Prime Minister will brief Tory Cabinet members on his speech today. Some of them want to leave the EU - and are urging him to threaten to quit in order to put pressure on other member states to offer concessions.
But Mr Cameron's differences with his Liberal Democrat deputy were laid bare when Mr Clegg warned that speculation about a referendum could have a "chilling effect" on jobs and foreign investment in Britain. "Uncertainty is the enemy of growth and jobs," he told BBC Radio 4. Investors could be frightened away by an "arcane debate that will go on for years and years and years".
Mr Clegg added: "I don't agree with the premise that we can unilaterally simply rewrite the terms of our membership of this European club, which is a club which is in need of reform. We don't know yet how the rules are going to be rewritten within the eurozone, we don't know when that would happen, in what way. And crucially, we don't know what that will ask of the UK."
Fresh Start, which has the backing of 100 Tory MPs, will call for the UK to regain control over a huge range of functions now handled by the EU, including social and employment laws, agriculture, fisheries and regional policies.
But the Centre for British Influence through Europe, which includes Mr Clarke, Minister without Portfolio and Lord Mandelson, Labour's ex-Business Secretary, dismissed the Tory MPs demands. An analysis for it by senior diplomats said: "The UK needs a positive, realistic European agenda, not a largely unrealistic, negative one. Repatriation proposals are not supported by practical methods to achieve the objectives. Many proposals could be achieved by negotiating with allies rather than having to demand [EU] treaty change."
It warned that such demands "could cause more alienation and provoke infringement actions against the UK from member states. Proposals to unilaterally break treaty obligations would be akin to defaulting on our debt. We would undermine all we have stood for as a state which abides by the rule of law."
The People's Pledge, an all-party group which campaigns for a referendum, said Mr Cameron must answer three crucial questions in his speech. They are whether he would still hold an "in or out" EU referendum if a renegotiation failed to materialise or produced minimal results; make a referendum a condition if he formed another coalition after the 2015 election, and pass a law before then saying there will be a public vote in the next parliament.