GERMANY has warned the UK Government against trying to "blackmail" the European Union in order to get a new settlement with Brussels, stressing a British exit would be a disaster.
The move comes hours after Philip Gordon, the US Assistant Secretary of State for European Affairs, expressed Washington's concern over the possibility of the UK leaving the 27-member club, hinting such a move would harm the transatlantic Special Relationship.
Labour seized on the latest intervention from Germany.
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Douglas Alexander, Shadow Foreign Secretary, said: "These warnings from Britain's allies come within a few hours of leading British business people joining the growing chorus of concern about David Cameron's approach to Europe."
He has accused the Prime Minister of putting party interest before national interest.
Just days before Mr Cameron's eagerly anticipated speech on Europe in the Netherlands, Gunther Krichbaum, a close ally of German Chancellor Angela Merkel, who chairs the Bundestag's European Affairs Committee, spoke out.
He said: "There is certainly a risk that [a referendum] could paralyse efforts for a better Europe and deeper integration. Britain would risk being isolated. That cannot be in Britain's interests."
In a direct warning to the Prime Minister, he said: "You cannot create a political future if you are blackmailing other states; that will not help Britain. It needs a Europe that is stable, it needs markets that are functioning."
Mr Krichbaum said demands for a major renegotiation of British membership could open a Pandora's Box of wishes from other member states and urged Mr Cameron to consider the consequences of a public vote.
He said: "It is possible to convince people of advantages of the EU but there is always a risk that the referendum becomes – as Charles de Gaulle put it – less about the question asked and more about the person who's asking it.
"If Britain loses the single market, it would be a disaster for the British economy.
"If Britain left the EU, it would weaken the European Union and the idea of Europe but it would also weaken the position of Britain vis-a-vis the EU and in the world."
Earlier, Nick Clegg fired a warning shot across Conservative eurosceptic bows when he said a referendum on Britain's relationship with Brussels risked reducing the UK to "subsidiary status" in Europe.
The Deputy PM insisted he was not afraid of a referendum but questioned why there should be "a great national debate about nothing very much in particular in response to a document that hasn't materialised yet and might never materialise".
He told journalists at a Westminster lunch: "Whatever question you put in any eventual referendum, the underlying question is the same – do we lead or do we hang back in a sort of subsidiary status?
"Not only ourselves but the Americans and others say: 'Look, you are a big nation, you have big horizons.' What the Americans are saying is: 'Act big; don't act small'."
In another warning to Tory eurosceptics, Mr Clegg pointed out three million British jobs were reliant on Britain's membership of the EU and "you play with this at your peril".
Meanwhile, Conservative backbenchers responded strongly to the US Government's intervention with eurosceptic MP Peter Bone calling on it to "butt out".
His Tory colleague Bernard Jenkin said: "The Americans don't understand Europe.
"They have a default position that sometimes the United States of Europe is going to be the same as the United States of America.
"They haven't got a clue."
A Downing Street spokesman said America "wants an outward looking EU with Britain in it and so do we".