Ed Balls
Labour\'s Ed Balls does not support a referendum on the UK\'s membership of the EU (Reuters)

Labour is backing the coalition government and Confederation of British Industry's call for a renegotiated UK membership of the European Union - though the party still refuses to put its support behind the proposed in/out referendum.

Shadow chancellor Ed Balls will tell the CBI that the EU needs reform but that the UK can only push for that by being firmly on the inside and without the looming threat that the country might quit anyway.

Prime Minister David Cameron said there will be a referendum on the UK's membership of the EU in 2017 if his party is re-elected with a majority at the next general election. Cameron called for the referendum after mounting pressure from his vociferous eurosceptic backbenchers, some of whom were beginning to doubt his leadership of the Conservatives.

"In my view, Britain has always succeeded, and can only succeed in the future, as an open and internationalist and outward-facing trading nation, with enterprise, risk and innovation valued and rewarded," Balls is expected to say at the CBI conference.

"Backing entrepreneurs and wealth creation, generating the profits to finance investment and winning the confidence of investors from round the world.

"That is why Ed Miliband and I share the CBI vision of Britain prospering in a reformed global Europe. You are right to challenge us politicians to maintain British influence and lead the debate about the reforms that Europe needs to deliver value for money, open up markets and secure rising prosperity.

"But Britain is better placed to shape Europe's future if we are fully engaged rather than having one foot out the door. We are clear that there is no future for Britain in walking away from our biggest market - or threatening to do so for reasons of internal party management.

"Europe needs reform, but to walk away from our EU membership would be reckless, foolish and deeply damaging. On Britain's future in Europe, the national interest must come first."

Since Balls unveiled his speech, John Cridland, CBI Director-General has hit back saying that they share common values.

"Business will be reassured by the Shadow Chancellor's comments that the Labour Party has no intention of separating big business from smaller business," said Cridland.

"We share ground on the need for Britain to build alliances to secure EU reform. The CBI also welcomes the Shadow Chancellor's recognition of the vital need to build UK infrastructure but we still do not see how a price freeze on energy costs would encourage investment."