WPP Chief Executive Sir Martin Sorrell tells Channel 4 News that David Cameron's EU referendum plan "creates uncertainty" for business as EU politicians warn "you can't do Europe a la carte".
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Interviewed at the Davos economic summit, Sir Martin said he "totally understands the PM's predicament from a political point of view" and that if he could negotiate better terms from EU leaders, "all credit to him".
But he added: "The problem is it creates uncertainty. At the very best you have to say it's neutral. At worst, it's negative. It cannot be positive."
WPP, the global advertising group, has just moved its headquarters back to London from Dublin, having left Britain in 2008 for tax reasons.
Sir Martin said he had been talking to car manufacturers in Asia and the US who were "worried" about Britain's position in Europe. "They have raised concerns about investment prospects in Britain with this uncertainty."
Cameron's EU uncertainty 'not positive' says UK business. Read Faisal Islam's blog
Mr Cameron's speech, pledging to renegotiate Britain's relationship with the EU and put this to the voters in a referendum by 2017, was also criticised by European leaders.
Last year, the prime minister said he would "roll out the red carpet" to French business people who wanted to settle in Britain to avoid tax increases levied by Francois Hollande's government.
Today, French Foreign Minister Laurent Fabius teased the British government, saying he had told British business people at a recent meeting "that if the UK decides to leave Europe we will roll out the red carpet".
Mr Fabius said "you can't do Europe a la carte", adding: "Say that Europe is a soccer club. You join this soccer club, but you can't say you want to play rugby."
German Foreign Minister Guido Westerwelle said while he wanted Britain to remain in the EU, "cherry picking is not an option".
Martin Schulz, president of the European Parliament, said Mr Cameron was playing "a dangerous game" with a speech that was "more about domestic politics".