The Forum of Private Business has responded to the Prime Minister's EU speech, by saying it would not support a straight ‘in or out' vote and has called for an alternative to the either/or option.
The small business lobby group has said there are dangers that without some kind of renegotiation, anti EU sentiment will grow.
The Forum's Head of Policy, Alex Jackman, said: "The Forum of Private Business does not support an ‘in/out referendum, simply because we don't think it will give anything like a clear mandate.
"Even an overwhelming ‘in' wouldn't silence the doubters, nor an overwhelming ‘out' lead to exit, given the political flip-flopping over this issue of recent years. And in all probability, there wouldn't be a significant majority one way or the other.
"But unless the UK can renegotiate terms, anti-EU feeling will grow. Institutions that are already seen as undemocratic will grow to become tyrannical in the views of many. The ever spiralling central budgets will create even louder voices than present. So the issue must be tackled."
Instead, the Forum believes the Government – and successive Governments – should be given the mandate to renegotiate terms and to maintain an opt out from ever closer integration.
Mr Jackman said: "In particular, we must insist that EU budgets are more closely monitored. If the European Commission wants greater funds from countries, it should first have proven the case that money cannot be saved from within. Businesses will tell you there are plenty of pointless policy exercises that could be culled if savings were being sought.
"Pinch points for small businesses do differ. It is a genuine bugbear for those small businesses in communities that have nothing to do with exporting and wonder what right the EU has to dictate how long their employees should be paid for sick leave, or how they should sit at work.
"But there is the other demographic for who the common market has helped enormously in growing their businesses overseas. Like it or not, most businesses export within Europe as their first step.
"What causes greater uncertainty for businesses isn't how closely integrated within the EU we are, it is the long term stability of our tax system. A huge multinational will invest in the UK not because of a common market but because of a stable tax regime and highly skilled workers. These are the real long term problems the Government needs to address.
"The truth is that our laws are now so intertwined with European legislation it is very hard for anyone to understand whether we should pull out, let alone how we would go about doing so. These are the problems the Prime Minister is faced with – how to mediate the competing views of Europe and how to accurately articulate the positives and negatives of our membership."
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Susie Hughes © Shout99 2013