Tesco says prospect of EU referendum is damaging UK

LONDON, April 19 (Reuters) - Tesco (Xetra: 852647 - news) , the world's third biggest retailer, said big businesses could be driven from Britain by the uncertainty surrounding a referendum on European Union membership, which the governing Conservatives have promised to hold if re-elected.

John Allan, chairman of the supermarket group since March, said the perception of a risk of the UK leaving the EU could have an impact on businesses' willingness to invest.

"London has more regional and global headquarters than any city in the world and some of those headquarters could actually be moved relatively painlessly to places within the EU," he told the Independent on Sunday.

The Conservatives want to renegotiate Britain's role in Europe and then hold a referendum by the end of 2017 if they form the next government after a general election on May 7. They hope this promise will neutralise the appeal of the anti-EU UK Independence Party.

The main opposition Labour Party has said it would only hold a referendum if there were a substantial transfer of power to Brussels.

Allen, who said he was not affiliated to any party, said that going into negotiations with a referendum promised whatever the outcome was causing uncertainty.

"It seems to me that the cart is very much before the horse," he said.

Tesco is due to report its annual results on Wednesday.

Dutch electronics group Philips (Amsterdam: PHIA.AS - news) also warned on Sunday it may reconsider investing in the country if Britain were to leave the EU.

"I would find it a real loss if the United Kingdom would not be part of Europe," Chief Executive Frans van Houten told the Sunday Telegraph. "I think it is unimaginable."

Many of Britain's business leaders have shrugged off the referendum, with more than 100 bosses saying in a letter on March 31 that a change of economic course under a Labour government would endanger recovery.

The former boss of Marks & Spencer (Other OTC: MAKSF - news) , Stuart Rose, said businesses were attracted to Britain because of the country's economic stability and flexible workforce.

"I think it's ridiculous to suggest that everybody is going to suddenly go offshore," he told Sky News on Sunday. (Reporting by Paul Sandle; Editing by Mark Trevelyan)