UK Markets open in 3 hrs 53 mins

European Union: Cameron Speech On Friday

(c) Sky News 2013

David Cameron is to deliver his long-awaited speech on Britain's relationship with Europe in the Netherlands this Friday, Downing Street has announced.

The announcement came after Mr Cameron expressed confidence that he can overhaul the relationship and warned against a UK withdrawal.

The Prime Minister is under intense pressure from his own party, the business community and international allies ahead of the crucial address.

Amid growing public euroscepticism, senior Tories are now openly talking about the prospect of Britain walking away from the organisation.

Speaking earlier on Monday, Mr Cameron held out the prospect of a referendum but only once the British relationship with the EU has "fundamentally" changed.

"A fresh settlement and then fresh consent for that settlement, I think that's the right approach," he said.

He also insisted that a straightforward in/out referendum would be a "false choice" because he believes most people do not want to leave entirely.

"The principle, I think, should be this: if you are fundamentally changing the relationship between Britain and Europe, then you should be having a referendum," he told the BBC.

But he continued: "I think if we had an in/out referendum tomorrow or very shortly, I don't think that would be the right answer.

"I think we would be giving people a false choice, because right now there are a lot of people who are saying I would like to be in Europe but I'm not happy with every aspect of the relationship so I want to change."

Despite increasing tension between Britain and its European allies over the repatriation of powers, Mr Cameron appeared hopeful he will be able to recalibrate the relationship.

"I'm optimistic and confident that we can achieve changes in the European Union to make sure that Britain feels more comfortable with our relationship with Europe," he said.

He denied that he was "blackmailing" the other members by arguing for the repatriation of powers.

"Britain, just like every other European country, has a perfect right to say we are members of this club, we are prominent members, we pay a large bill for being a member of this club," he said.

"We are perfectly entitled to argue that it needs to change."

His comments came as Communities Secretary Eric Pickles became the second Cabinet minister in recent days to raise the prospect of Britain leaving the European Union.

Amid deepening divisions in the Conservative Party over the issue, Mr Pickles said the UK should not remain a member "at any price".

"If it's in our clear national interest that we should remain in the European Union - and I sincerely hope that is the case - then we should stay, but we shouldn't stay at any price," he said.

His intervention echoed that of Chancellor George Osborne, who said last week that the EU "must change" if Britain is to remain a member of the EU.

Tory heavyweight Ken Clarke is on the other side of the debate and will share a platform with Lord Mandelson later this month to stress the benefits of staying in the Union.

The pair are launching a new cross-party organisation, the Centre for British Influence through Europe (CBIE), to make the "patriotic" case for British engagement.

Around 20 Tory MPs have also apparently signed a letter, due to be published this week, warning of "massive damage" if the UK leaves the EU.

Mr Cameron is also under pressure from his Liberal Democrat coalition partners and Labour to avoid leading Britain towards the EU exit door.

Business chiefs including Sir Richard Branson have warned about the damaging uncertainty and last week, US diplomat Philip Gordon said American wanted Britain to stay in.

The Prime Minister said his speech, which has been expected for several months amid growing speculation about his stance on the EU, was "finished and ready to go".

He briefed German Chancellor Angela Merkel and Dutch Prime Minister Mark Rutte on its contents by phone over the weekend and will speak to other EU leaders this week.

More From Sky News