Cameron abandons his speech on EU as Algeria hostage crisis ends in tragedy

The Prime Minister made the 11th-hour decision to call off his trip to Amsterdam and focus on the situation in North Africa, where it was reported two British workers were among the dead following an Algerian military raid to free hostages and reclaim the desert gas plant.

The picture on the ground remained unclear last night, after earlier reports that between six and 35 hostages and eight and 15 rebels had been killed in the fighting at the BP gas compound.

Mr Cameron said: “It’s a fluid situation; it’s very uncertain. We should be prepared for the possibility of further bad news.”

The Prime Minister had been due to fly to Holland last night ahead of his speech on Europe this afternoon, in which he was due to set out the terms for a future referendum on the country’s EU membership.

Earlier in the day Nick Clegg had delivered a stark warning that Mr Cameron risks creating “years and years of grinding uncertainty” for British businesses by suggesting the UK might pull out of the EU.

Speaking during a question-and-answer session at the Yorkshire Post’s new head offices in Leeds, Mr Clegg warned of the “danger” to the British economy of leaving a question mark hanging over its EU membership for another five years.

The Deputy Prime Minister, who is known as a passionate pro-European, said he “just simply doesn’t understand” why Mr Cameron might seek to give the impression that the UK would consider leaving “the world’s largest borderless market”, where “close to half our exports” are sold.

“The danger of creating such a high level of political uncertainty for such a long period of time is that inhibits investment decisions and business investment,” Mr Clegg said.

“The greatest enemy to economic confidence is instability and uncertainty.

“We’ve given the people the reassurance there will be a referendum if there’s a question to be asked. Why then add to that by having years and years of grinding uncertainty, when our economy is still fragile and trying to get back to full strength?”

Mr Clegg’s intervention at the event, which was organised to mark the first anniversary of the launch of the Yorkshire Post’s quarterly business magazine Yorkshire Vision, was the most significant in a day of seemingly endless interjections on the subject of Europe from individuals and factions within his party, the Coalition Government and the wider business community.

Mr Clegg’s Lib Dem colleague Vince Cable, the Business Secretary, warned Mr Cameron he risked taking Britain out of the EU “by accident”.

“Once you talk about renegotiation, you are opening up the possibility that if you don’t get what you want, you leave – by accident or design,” Mr Cable said.

But the Prime Minister received backing from his sometime rival, the Conservative Mayor of London Boris Johnson, who was expected to say in a speech last night that Mr Cameron was right to try to renegotiate Britain’s relationship with the EU while maintaining its position in the single market.

Mr Johnson was due to say: “Given that the euro has turned out to be a fiasco – as we predicted – it would be reasonable for us to say to our friends and partners, ‘look, you are going ahead with this project for a fiscal union.

“We won’t be a part of it... But we will allow you to use our common EU institutions to pursue your project, if you help us with a renegotiation.’

“We therefore want to complete the single market – which everyone supports – and we want to get rid of some of the barnacles that have become attached to the hull.”

Labour leader Ed Miliband, however, warned Mr Cameron was about to take Britain “to the edge of an economic cliff” by creating uncertainty for businesses across the UK.