In his first intervention in the mayoral election, Lord Peter Mandelson exclusively told City A.M. that he wants to call on the business community to make sure Goldsmith isn’t allowed to use “the full force of the role of mayor” to push the UK into leaving the EU.
Mandelson, who was responsible for overseeing all EU trade deals between 2004 and 2008, also warned that a vote to leave the EU would be bad for the City of London and lead to years of uncertainty around trade agreements.
“If Britain votes to leave the EU it would be a direct threat to London's growth and jobs as the City's financial services sector would no longer be able to trade normally with the rest of Europe,” Mandelson said.
But Vote Leave, the officially designated Out campaign group, said Mandelson is "wrong".
"Mandelson made all the same predictions 15 years ago which turned out to be utter rubbish. His credibility on the EU is non-existent as he lacks all perspective on the matter . He was wrong then and he is wrong now," a Vote Leave spokesperson said.
But Mandelson said: "Leaving Europe would mean years of uncertainty in Britain's relationship with the EU and it would not be possible to replace the existing trade relationship with anything like the access and freedom we have at the moment with a full say over EU regulations governing financial services.
"Over time London's pre-eminent position as Europe's financial centre would be bound to decline as businesses opted instead to keep their current rights and freedom to trade within Europe's Single Market.”
The comments from Mandelson, who has long advocated the merits of the EU, comes after President Barack Obama said that it would take the UK 10 years to negotiate trade deals with the US if it left the EU.
Earlier this month the City of London Corporation warned that leaving the EU would cause a shock to Britain’s financial industry, put foreign investment at risk and depress growth.
However, a poll from YouGov found that the business vote for the UK to remain in the EU is far more divided than perviously thought. It showed that 40 per cent of executives surveyed think the UK would be better off out of the trading bloc, with 49 per cent in favour of staying in and 11 per cent undecided.
Still, the Labour peer added that Brexit would be catastrophic for jobs, industry and the financial sector because the UK would not only lose trade in Europe but would lose the benefits from the EU’s trading rights and preferential access in foreign markets.
“This would mean new tariffs of 10, 20 per cent or sometimes even more on key UK exports as well as regulatory barriers in key international markets,” he added.
“Whoever is mayor will play an influential role in June's EU referendum.
“That’s why we need a mayor like Sadiq Khan who understands what's at stake for London, who will be pro-business and a champion for London's expanding role in the EU because he gets how important the European market is for London's businesses and their employees.”
A spokesman for Zac Goldsmith hit back, saying: "London needs a Mayor who will work with the government to keep the economy strong. The biggest threat to London’s economy and jobs is a four year Corbyn-Khan experiment with our capital."
"It's truly pathetic that the Labour Party of Jeremy Corbyn, John McDonnell and Sadiq Khan - that wants to take back control of Bank of England, abolish the City of London Corporation and put up taxes - should try to lecture anyone about the City."
Recent polling has put Khan steadily ahead of Goldsmith when second preferences are taken into consideration.
Khan has made the UK's continued EU membership a cornerstone of his campaign, while Goldsmith, who wants to leave the EU, has previously said that the EU is not a mayoral policy and that the job of the next mayor is to make work whatever is the choice of the British people.
Mandelson's comments come amid growing tension between the Goldsmith and Khan campaigns, with Khan backers alleging that Goldsmith's campaign has been divisive and preyed on islamaphobia.
Indeed, Goldsmith has been criticised for sending out leaflets to that effect, calling Khan "radical and divisive".