The prime minister's uncertainty over Britain's relationship with Europe is a dangerous gamble that could cost the country jobs, Lord Heseltine has warned.

Heseltine, an adviser to David Cameron on economic growth, warned him not to take a "punt" by agreeing to hold a referendum on Britain's future in the European Union.

Cameron will make a long awaited speech on the European Union later this month, when he is expected to call for a renegotiation of Britain's membership of the EU and possibly a referendum on Britain's new terms.

The prime minister's strategy derives from the expectation that Germany wants to review the Lisbon treaty. Such a review would allow all other member states to renegotiate parts of the treaty. However, the Guardian reported on Saturday that Angela Merkel, the German chancellor, has decided not to seek any revisions.

Lord Heseltine told the Financial Times that it was foolish to discuss a referendum on the prospect of negotiations that have yet to happen.

"Mrs Thatcher said 'Never go into a room unless you know how to get out of it,'" he said, "To commit to a referendum about a negotiation that hasn't begun, on a timescale you cannot predict, on an outcome that's unknown, where Britain's appeal as an inward investment market would be the centre of the debate, seems to me like an unnecessary gamble."

This week, the United States intervened in Britain's European debate to warn that it considered the UK's membership of the EU as strategically important. Philip Gordon, the assistant secretary of state for European affairs said the US wanted Britain to remain a strong voice in Europe.

Lord Heseltine said the government's indecision could stop companies from investing in Britain. "If I was responsible for inward investment into any of our European colleagues, it would give me the best argument I could dream of," he said. "Why put your factory [in Britain] when you don't know – and they can't tell you – the terms upon which you will trade with us in future?"

Douglas Alexander, Labour's shadow foreign secretary, said the chorus of criticism of the prime minister's approach to Europe was growing."At a time when the priority should be jobs and growth, the prime minister sadly seems willing to put vital UK investment at risk for the sake of trying to keep his party united," he said.

"Starting the year by edging Britain towards exit simply undermines confidence and prospects for growth. British business and even the prime minister's own adviser recognise this – when will he?"