David Cameron's pledge to hold a referendum on Britain's membership of the European Union is criticised by his Liberal Democrat coalition partners.

Deputy Prime Minister Nick Clegg said a renegotiation of Britain's position in Europe was not in the national interest and would lead to years of uncertainty for business.

"The biggest challenge which is facing our country is that we have a fragile economy which is taking time to recover. That's why my priority, certainly the priority of the Liberal Democrats, is to build a stronger economy in a fairer society.

"Now, that job is made all the harder if we have years of grinding uncertainty because of an ill-defined, protracted renegotiation of Britain's status within the European Union.

"That, in my view, will hit growth and it will hit jobs and that's why, in my view, it's not in the national interest."

High stakes

Lord Mandelson, a former cabinet minister and European commissioner, said the prime minister was "playing for very high stakes indeed and I do not believe he is going to get what he wants by attempting to put a pistol to the heads of his fellow member states".

The peer told BBC Radio 4's Today programme Mr Cameron was trying to placate Conservative Euro-sceptics and it was now "game, set and match to the hardliners in his party".

Read more: PM's speech 'not positive for investment' says top businessman Martin Sorrell

Lord Mandelson added that the prime minister was "actually leaving open the option to recommend against the deal he gets and to Britain leaving the European Union altogether".

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The peer told BBC Radio 4's Today programme Mr Cameron was trying to placate Conservative Euro-sceptics and it was now "game, set and match to the hardliners in his party".

Read more: PM's speech 'not positive for investment' says top businessman Martin Sorrell

Lord Mandelson added that the prime minister was "actually leaving open the option to recommend against the deal he gets and to Britain leaving the European Union altogether".

Mr Cameron announced in a speech today that he would seek to renegotiate Britain's relationship with the EU and put this to the voters in a referendum by the end of 2017, with a no vote leading to withdrawal.

'One-way street'

Former Lib Dem leader Lord Ashdown said: "Mr Cameron has effectively told us that it is his intention to put Britain on a one-way street to leaving Europe."

Sir Menzies Campbell, another former Lib Dem leader, said: "The prime minister's efforts to reconcile his own position with that of his Euro-sceptic backbenchers leads logically to the position that if he could not get what he wanted out of Europe, he would be willing for the UK to leave."

David Cameron's Europe speech - the key questions

Many Conservative MPs are worried about Ukip's recent success at the ballot box and wanted Mr Cameron to make clear in his speech that he wants a change in Britain's relationship with the EU.

Ukip leader Nigel Farage said the referendum promise was a vindication of his party's long struggle, but warned that securing a no vote would be tough and his party's "real job starts today".

Mr Cameron announced in a speech today that he would seek to renegotiate Britain's relationship with the EU and put this to the voters in a referendum by the end of 2017, with a no vote leading to withdrawal.

'One-way street'

Former Lib Dem leader Lord Ashdown said: "Mr Cameron has effectively told us that it is his intention to put Britain on a one-way street to leaving Europe."

Sir Menzies Campbell, another former Lib Dem leader, said: "The prime minister's efforts to reconcile his own position with that of his Euro-sceptic backbenchers leads logically to the position that if he could not get what he wanted out of Europe, he would be willing for the UK to leave."

David Cameron's Europe speech - the key questions

Many Conservative MPs are worried about Ukip's recent success at the ballot box and wanted Mr Cameron to make clear in his speech that he wants a change in Britain's relationship with the EU.

Ukip leader Nigel Farage said the referendum promise was a vindication of his party's long struggle, but warned that securing a no vote would be tough and his party's "real job starts today".

He told Today: "For the first time, a British prime minister is at least discussing the fact that leaving is an option."

Shadow business secretary Chuka Umunna said the referendum promise would mean "five years of uncertainty" that would harm investment in the UK.

He declined to rule out Labour matching the referendum promise, saying only that the party supported existing legislation guaranteeing a public vote on any transfer of powers to Brussels.