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Don’t mention the ‘B-word’ on UK Budget day

The U.K. is clearly focused on the chancellor's forthcoming "Budget" on Wednesday in which he will spell out his spending plans and cuts over the next year but the specter of a potential exit from the European Union - a "Brexit" - is looming large over the proceedings.

Chancellor George Osborne is expected to announce a new wave of austerity measures and spending cuts when he presents his budget to parliament at lunchtime on Wednesday. He is also expected to update ministers on economic projections for the U.K.

Read More Austerity in the UK: Osborne sharpens knife

Lastly, the subject of the referendum on June 23 on whether to stay or leave the EU is expected to feature prominently in his speech. A so-called "Brexit" has become a distinct possibility with polls suggesting the vote will be too close for comfort for Prime Minister David Cameron, who is backing Britain staying in a "reformed Europe."

Cameron's critics feel that promises for reforms in the EU do not go far enough and that Britain would be better off outside the political and economic bloc. "Stay" campaigners say leaving would be a leap into the unknown and could leave Britain in the economic and political wilderness.

TangMan Photography | Getty Images

Key characters on both sides of the Brexit debate told CNBC on Wednesday that the referendum was a crucial factor in the country's economic future.

"I think the scare stories that the economy's going to tank, that investment's going to drop, that we're going to float off into the Atlantic and sink, all these scare stories you hear are nonsensical," John Mills, founder and chairman of consumer products JML and deputy chairman of the "Vote Leave" campaign, told CNBC Wednesday.

"My opinion is that the economy would probably do slightly better and at the very worst it will do slightly worse but I don't think that's going to happen. There won't be a cataclysm at all." Mills said he objected to the cost of EU regulations that British businesses faced and hoped that by leaving, these would be reduced.

Needless to say, the debate over Brexit has caused splits within both the main political parties and between politicians. On Tuesday, Labour party politician Chuka Umunna and pro-Brexit Conservative party MP Boris Johnson clashed over the issue during a radio debate, telling each other to "man up"

Meanwhile Chuka Umunna, a member of parliament (MP) for the Labour Party and a supporter of the "stay" campaign, told CNBC on Thursday that those kinds of lively debates over the issue would continue in the run-up to the vote.

"Let's get this in perspective: this is the start of a very long campaign and obviously the 23rd of June is the big day and our job as policymakers and politicians is to put the case on both sides in the best way that we can, furnishing people with the facts that they need."

"In the end, myself and Boris can debate stuff in a lively way but we've got a long way to go and both of us will be engaged in lots more debates before then," he said. "For me this goes beyond personalities, it goes beyond Chuka and Boris and Tory and Labour, this is about the future of our country."

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