Mixed response to Euro talk

Business leaders have given a mixed response to David Cameron’s EU referendum proposal, with some high profile figures warning that it could hurt inward investment.

The head of US-based investor Pimco, Mohamed El-Erian, told the BBC yesterday that the proposal could raise the UK's cost of borrowing in markets.

However, a group of 55 British business leaders have written an open letter to the Times throwing their weight behind Mr Cameron's strategy.

"We need a new relationship with the EU, backed by democratic mandate," said the group of top bosses, who include the chief executives of B&Q-owner Kingfisher, mining group Xstrata, electricals retailer Dixons, the London Stock Exchange and beverages maker Diageo, as well as the chairman of engineering firm Rolls Royce.

Meanwhile Sir Martin Sorrell, chief executive of the multinational advertising company WPP, warned: “A referendum adds to uncertainty – it doesn't diminish uncertainty. I understand the PM's predicament. But a referendum creates more uncertainty and we don't need that. This is a political decision, not an economic decision. If I am looking at it from WPP, it isn't good news."

Ian Cheshire, chief executive of Kingfisher, which owns DIY chain B&Q and its equivalent in France, Castorama, said he supported the idea of a referendum that he hoped would "put this to bed".

"It is a good step forward. The prime minister is trying to shape the agenda rather than things happening as a result of drift and by default," he said in the Guardian.