Economic Secretary Sajid Javid said the best outcome of the process to change the UK's relationship with Brussels started by David Cameron would be remaining in a reformed EU more focused on free trade.
But with the Tories committed to a referendum on the UK's membership of the 28-member union by the end of 2017 Mr Javid said he would "embrace the opportunities" created by a vote to sever ties with Brussels.
He told The House magazine: "The best outcome is we do have a renegotiated relationship. I've done thousands of negotiations in my job in business and you never go into a negotiation without some sort of weapons in your arsenal, so we are right to have a referendum as it increases our ability to negotiate.
"I think the European Union should be much more focused for us on free trade in goods and services. If the British people decide that they want to leave the European Union, that's not something I'd be afraid of.
"In my 20 years in business I've worked around the world, I think we are already a global player, an international country when it comes to business. I want that to happen inside the European Union and we can reform it and focus it on trade and ensure it is not insular looking.