Cameron urged to 'exploit eurogeddon'

David Cameron should exploit the eurozone crisis by introducing radical policies, including a controversial freeze in state benefits, Conservative MPs will argue today.

The 40-strong Free Enterprise Group of Tory backbenchers wants the Government to seize the opportunity offered by what it calls "eurogeddon" – the threat of a meltdown in the single currency if Greece pulls out. In a report, the MPs say Britain should counter the threat posed by economic turmoil in the eurozone by a more active go-for-growth strategy. They want to see small companies exempted from employment laws such as those which allow workers to claim unfair dismissal.

The MPs say Britain should create "low-paid flexi-jobs" not covered by tax and many employment regulations, while the Government should issue new "infrastructure bonds" to finance building projects such as new roads or airport expansion.

Meanwhile, a minister has advised Mr Cameron to adopt a more Eurosceptic stance during the crisis to revive support among core Tory voters. Chris Grayling, the Employment minister, urged him to seek more "EU veto moments" after the party's opinion poll ratings were boosted when he blocked a new EU-wide treaty change on fiscal union in December.

Mr Grayling told an event hosted by the ConservativeHome website: "It's easier to explain to a voter that we are unhappy with what the EU is doing because, for example, it wants us to allow people to come here and settle and be able to access our benefit system without the safeguards we have in place today. That's something everyone can understand."

Such attempts to turn the eurozone's problems to the party's advantage could cause tension with the Liberal Democrats. Nick Clegg was appalled by Mr Cameron's veto and has blocked proposals to allow firms to fire workers "at will" recommended by Adrian Beecroft, a venture capitalist and Tory donor. The Liberal Democrats fought hard to ensure state benefits were uprated by 2.5 per cent last month.

Yesterday the Deputy Prime Minister struck a different tone to Tory MPs on the euro. Speaking in Berlin, Mr Clegg warned that "no rational person" would want to see Greece leave the single currency. He added: "We cannot let this crisis shake our commitment to Europe's big idea – that union is worth pursuing as a means to peace and prosperity alike. That is the case I will be making in the UK, where some paint Europe's problems as a distant irrelevance."