Gordon Brown will use a summit tomorrow to push for the scrapping of EU red tape to help save jobs, in the latest sign that ministers are braced for a severe recession.
The Prime Minister believes some new directives should be ditched or delayed to ease the pressure on businesses teetering on the brink, after a week that saw thousands more jobs cut across companies ranging from investment banks to Woolworths.
Downing Street will also press for the rules of the EU stability and growth pact, which prevents member states running too far into deficit, to be relaxed during the crisis - allowing countries in the eurozone to try to spend their way out of trouble by offering tax cuts or new public spending programmes. Brown is known to fear that his own pre-Budget package will lack impact if it is not copied by others.
The move may, however, heighten speculation that the UK is keeping its options open over adopting the euro, since relaxing the pact could ease Britain's path into the single currency at a future date. The head of the European Commission, José Barroso - who will join Brown and the French President, Nicolas Sarkozy, for tomorrow's talks - recently said the euro was being discussed at the highest levels.
Protecting jobs is likely, however, to be the main focus tomorrow. 'There may be some focus on European red tape and how we could cut or put it off for a while, putting on hold some of the things that businesses complain about and looking at whether these are absolutely necessary or should be scrapped,' said a Downing Street official.
Brown is also expected to push for a cut in VAT on 'green' products to be introduced earlier, arguing that low-carbon technology could be a rare growth area in lean years.
Leading business figures and economists will be invited to put their case, with some manufacturers anxious that EU rules on state aid could prevent the government bailing out the likes of the car industry.