Polls show Brexit support grows ahead of EU referendum

Two polls on the UK's membership of the European Union suggested growing support for a 'Brexit' in a referendum that could be held next year, which could ramp up levels of market volatility in coming months.

A survey for the Vote Leave campaign published in the Daily Telegraph found 41% wanted to leave while 42% wanted to stay, though if undecided voters were excluded the leave vote rose to 50%.

If Prime Minister David Cameron fails in his efforts to win concessions on freedom of movement and curbing migration, the same poll found 45% would vote for a British exit and 40% would back staying in the EU. If undecided voters are exlcuded, 53% would want to leave and 47% to remain.

A separate poll in the Express found 42% would vote to leave compared with 40% who would vote to stay.

Although British surveys have lost credibility since the general election earlier this year, analysts have warned that a Brexit would not only harm UK growth and investment prospects but would be likely to reignite and strengthen Scotland's push for independence.

According to ratings agency Fitch, a referendum on EU membership will be held in the second half of next year, if Cameron concludes his negotiations with the EU in coming weeks.

Cameron's attempts to renegotiate the terms of Britain's EU membership have met "substantial political differences" it emerged last week, though good progress had been made on at least two of the Prime Minister's four demands.

The Prime Minister is reportedly hoping talks with EU leaders over dinner this Thursday will pave the way for a deal by February, allowing him to have a referendum next year.

Standard & Poor's has said a UK exit could lead to a two-notch downgrade on the country's credit rating, while Moody's has argued that while the economic impact of a Brexit would be negative, the damage was unlikely to lead to a downgrade.