The new year has begun with renewed pressure on David Cameron to start the clock ticking on Britain's abandonment of the EU. Tory MEP, Daniel Hannan, the anti-Europeans' keenest ideologue, argues that quitting should hold no terror for Britain as we are the world's seventh largest economy. Does he not realise the substantial contribution the EU's 500 million-person single market is making to keeping us in this position and that the distant relationship he seeks will deliver significantly less to our economy?

Yet the prime minister seems to think he can only pacify his party by conceding to anti-Europeans their long coveted referendum. I think his hopes for buying peace will be disappointed. The Tories risk dividing into irreconcilable factions, those who want to adjust the terms of Britain's EU membership in order to stay in, and those who will do everything they can to get Britain out. That's what happens when madness takes over a political party. Ask anyone who was in the Labour party in the 1980s.

Beginning 2013 by placing this large and indefinite question mark over our membership of the EU, and all the trade and investment privileges it brings us, can only be described as economically insane. The signal it sends to the world is that we are on our way out of the European single market and that those who invest in Britain in order to trade in that market should think again.

International companies now headquartered in Britain will start wondering if they should opt for a continental base. Why should investors who want to take advantage of the prospective EU-US free trade agreement consider doing so by investing in Britain if they think we will not be fully part of the pact?

We already have huge factors weighing against our economic recovery. We cannot afford further uncertainty. International companies invest in Britain for our benign business climate but also because, in doing so, they have access to Europe's huge market. We are too small on our own to attract the same quantity and quality of investment, just as we are too small to forge trade pacts with other parts of the world by ourselves and too small to influence major global events.

The prime minister's answer to this, in his forthcoming speech, may be that he will limit the uncertainty by imposing a negotiating deadline on other heads of government. Again, he will be disappointed if he thinks he can put a gun to their heads to begin renegotiating Britain's EU membership and then dictate when it will end, especially when, in their view, he is arguing not in Europe's interests as a whole but for British exceptionalism.

Cameron argues that the EU is going to undertake a major treaty change anyway so no one will mind if, along the way, we ask for a recasting of Britain's membership, the so-called repatriation of powers. But he seems not to have noticed that Germany and other eurozone partners are wary of a major treaty revision. If the eurozone becomes critical again, a wider negotiation may become more urgent. But in this case, the others will have more on their mind than Britain's cherry-picking demands: their priority will be saving the eurozone.

To put it mildly, the EU is experiencing serious problems, the status quo is unacceptable and major reform is required. In particular, it has to find new ways of containing those inside and outside the eurozone and make its institutions more accountable. The single market must be extended and deepened with other regulation lightened. These are precisely the areas where Britain's voice should be loudest. For the country to forsake this influence and risk driving away much needed investment is not just irresponsible, it's incomprehensible to all but the hardest hardliners.