UK Election 2015

Look who's back: Blair joins fight for UK votes

After years avoiding the party he used to lead, former U.K. Prime Minister Tony Blair has joined the campaign for Labour Party votes in the too-close-to-call UK general election.

The controversial former PM, who left his premiership under a cloud after taking the U.K. into the second Gulf war, warned Tuesday that another Conservative government will risk British jobs and the country's place in the world if it goes ahead with its planned referendum over membership of Europe's political and trade alliance.

The former Labour leader criticized current Prime Minister and Conservative party leader David Cameron in a speech in the northern town of Sedgefield on Tuesday, saying that his decision to offer a referendum on the U.K.'s membership of the EU by 2017 if his party wins another term in office, puts Britain's future at risk.

Tony Blair
Chris Ratcliffe | Bloomberg | Getty Images

"I believe passionately that leaving Europe would leave Britain diminished in the world, do significant damage to our economy and, less obviously but just as important to our future, would go against the very qualities and ambitions that mark us out still as a great global nation," Blair said, according to a copy of his speech released by the Labour Party Tuesday.

"The Tory campaign talks of chaos should Labour win. Think of the chaos produced by the possibility never mind the reality of Britain quitting Europe. Jobs that are secure suddenly insecure; investment decisions postponed or cancelled; a pall of unpredictability hanging over the British economy."

Voter polls

Blair's criticism comes after the latest voter opinion poll published Sunday showed that Cameron's Conservatives have edged ahead in the election race.

The YouGov/Sunday Times poll of voter intentions, which came after a television debate between the main political parties' election candidates last week, put the Conservatives ahead with 34 percent of the vote, just ahead of Labour's 33 percent.

The Conservatives are currently in a coalition government with the Liberal Democrats, who were seen with 10 percent of the vote, behind the U.K. Independence Party (UKIP), which advocates leaving the European Union, which had 13 percent of the vote, according to the poll.

Adam Myers, senior FX strategist at Credit Agricole, told CNBC on Tuesday that the Conservative party could move ahead in the next few weeks. In addition, he believed voter support for UKIP was eroding, and the Conservatives would try to mop up those votes too.

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"Where does that UKIP vote go if it continues to decline? Obviously, David Cameron would like it to go back to the Conservative party but it could go elsewhere. At the moment what it does appear to be doing that and that could have implications for markets," he told CNBC Europe's "Squawk Box."

Myers was not convinced that a referendum over EU membership was a potential danger, saying that the number of U.K. voters that wanted to leave the EU was "at its lowest level since polling began."

'Opportunity knocks'

Apart from Britain's membership of Europe, maintaining the momentum currently seen in the U.K. economy is also at the top of the agenda.

According to the Confederation of British Industry (CBI) on Tuesday, U.K. economic growth held steady in the three months to March and is expected to gather momentum over the next quarter.

The CBI's survey of 764 businesses which brings together economic-activity survey data from a range of business sectors showed stronger growth in various sectors. Katja Hall, CBI Deputy Director General, said although the outlook for 2015 was encouraging, the euro zone remained a risk.

60 second pitch for business
60 second pitch for business

"The main risk to the UK economy comes from the euro zone, with continuing wrangling over Greece's bailout package stoking uncertainty. Plus, many businesses will also have to contend with a stronger pound weighing down on already weak export growth."

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Whether sterling will remain robust in the face of an uncertain election outcome is uncertain, however. One investment firm recommended Tuesday that "opportunity knocks as the (political) rhetoric gets louder" and that investors should "buy the dips."

"The noise from the current election campaign can be expected to produce short term weakness in sterling and U.K. equities - presenting attractive valuations for investors to buy into," Simon French, senior economist at Panmure Gordon, said in a note Tuesday.

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Panmure's analysis remarked that there was a marked sell-off in sterling and U.K. equities ahead of the last 2010 election, followed by a relief rally. The firm expected history to repeat itself.

"We expect this short-term weakness to sterling to repeat itself in the run-up to the 2015 Election… In short, we believe there is a high chance it will undershoot its medium term value in the coming weeks – before rebounding."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld