Germany's Chambers of Commerce and Industry has warned that a UK exit from the European Union (EU) would be "disastrous" for Britain and Germany.
Volker Treier, deputy chief executive of the organisation, told the BBC that German business is "astonished" that the UK is planning a referendum over its EU membership.
Prime Minister David Cameron is due to meet Angela Merkel in Berlin on Friday.
Mr Treier said the German Chancellor should not offer concessions.
He is concerned that if the UK receives concessions then other nations might also demand negotiations over their terms of membership.
"We are really astonished about this referendum," he said.
The organisation estimates that German companies employ nearly 400,000 people in the UK.
Mr Treier said many of those companies were unsettled by the planned referendum.
If the UK were to leave the EU, he warned that a significant number of German firms would contemplate reducing their investment in Britain.