Osborne vs Clegg as referendum drives wedge between coalition

The full effect of the promise of a referendum on the coalition was starting to become clear today, after George Osborne delivered an outspoken attack on Nick Clegg and the Liberal Democrats.

The chancellor hit out at the deputy prime minister after he told reporters the referendum promise would create investor uncertainty for the next five years.

"I don't agree with him on this, and I don't think it's any secret that Liberal Democrats and the Labour party don't think people should be asked about our future in Europe," Osborne told BBC Breakfast.

"A lot of big British businesses and small businesses came out last week and said actually one of Britain's problems are the taxes and regulations from Europe, and it's affecting the entirety of Europe and we've got to keep up with Asia and America.

"So there is a challenge for all the businesses to get Europe working for us and that's what David Cameron and myself want to do."

David Cameron insisted the need for a referendum would be a 'red line' issue in any future coalition.