Vince Cable: EU Referendum is Holding Back UK Economic Recovery
Vince Cable: EU Referendum is Holding Back UK Economic RecoveryReuters

Britain's business secretary Vince Cable believes uncertainty over whether the UK will leave the European Union – dubbed the "Brexit" – is spooking investors and holding back a full economic recovery.

Cable told an audience of economists that a potential vote on the subject, pending a Conservative win at the next general election in 2015, has hindered investment from overseas as is deeply unsettling for businesses.

"The prospect of a referendum and possible exit from the EU is deeply unsettling for businesses trading in the European single market, from the car industry to financial services," said Liberal Democrat Cable.

"The actual risks of leaving may be small, but one of the most useful contributions to recovery our coalition partners could make, in the national interest, would be to do more to remove this unnecessary risk."

"Undoubtedly some on the Conservative side of the coalition see fiscal consolidation as a cover for an ideologically driven, 'small-state' agenda.

"The Lib Dems will reduce the debt burden but ensure this isn't done at the expense of public services and the most vulnerable in society."

Chancellor George Osborne has already warned the EU that the UK and other countries will leave the bloc if it does not reform.

He said that if the Conservatives are re-elected in 2015, they will keep their promise to renegotiate the UK's EU ties before offering Britons an in/out membership referendum.

According to a number of recent polls, a slim majority said it would vote to leave the EU if it was given the chance.

"Our determination is clear: to deliver the reform and then let the people decide," said Osborne.

"It is the status quo which condemns the people of Europe to an ongoing economic crisis and continuing decline. And so there is a simple choice for Europe: reform or decline."

He added that "non-Euro states need their rights legally protected if countries like Britain are to remain in the EU.

"EU treaties are not fit for purpose and [Britain] doesn't want the UK to be forced to choose between joining the euro and leaving the EU."