LONDON (Reuters) - British Prime Minister David Cameron's plan to hold a European Union membership referendum if he is re-elected next month would lead to an intense period of uncertainty for businesses, former British Prime Minister Tony Blair said on Tuesday.
Cameron, whose Conservatives are neck-and-neck with the opposition Labour Party in most polls ahead of the May 7 vote, has promised to renegotiate Britain's ties with Brussels, and then hold a referendum by the end of 2017.
In a campaign speech on Tuesday, former Labour leader Blair, prime minister from 1997-2007, said the "short-term" pain of Cameron's proposed re-negotiation has been underestimated.
"Think of the chaos produced by the possibility, never mind the reality, of Britain actually quitting Europe," Blair, 61, said.
"Jobs that are secure suddenly insecure; investment decisions postponed or cancelled; a pall of unpredictability hanging over the British economy."
If Britain voted to leave the EU, business would face the most intense uncertainty since World War Two, Blair said.
"There would be significant business uncertainty in the run-up to a vote but should the vote go the way of exit, then there would be the most intense period of business anxiety, reconsideration of options and instability since the war."
In response to Blair's comments, Conservative finance minister George Osborne rejected the idea that the referendum would deter investors, citing continued inward investment since his party first made the pledge.
"He's doing a good service to us all today by ... advertising the fact that if you vote Conservative, you get a referendum on Britain's membership of the European Union," Osborne told a news conference.
Blair argued that Cameron made the referendum pledge to appease Eurosceptic members of his party and to try to win back voters who have defected to the anti-EU UK Independence Party.
"This issue, touching as it does the country's future, is too important to be treated like this," Blair said.
He also cited the Scottish National Party, who failed to win a referendum on Scottish independence last year but have since rebounded strongly, as an example of how difficult it might be to win a vote to keep Britain in the EU.
"Nationalism is a powerful sentiment. Let that genie out of the bottle and it's a Herculean task to put it back in and reason alone struggles," he said of the Scottish vote. "The referendum on Europe carries with it exactly the same risks."
Additional reporting by William James; editing by Stephen Addison