A report commissioned by London mayor Boris Johnson has concluded that British exit from the European Union is "definitely a viable option" for the capital, and better than staying in an unreformed EU.
Mr Johnson is expected to throw his weight behind the report by banker Gerard Lyons in a speech to launch the document on Wednesday, the Sunday Times and Sunday Telegraph reported.
The Sunday Times quoted a source close to the mayor as saying he believes David Cameron must be "bold" in his demands in the renegotiation of the UK's EU membership he has promised if Conservatives win next year's general election and that the best way of achieving this is by showing he has "no fear" of departure if the talks fail to deliver.
Mr Johnson is expected to endorse a list of eight demands for reform proposed by Mr Lyons which go beyond what the Prime Minister has publicly set out.
According to the Sunday Telegraph, the Lyons Report finds that London's GDP of £350 billion - around a fifth of the UK economy - can be expected to grow to £640 billion by 2034 if Britain stays in a reformed EU with a new orientation towards trade with growing markets in the rest of the world but would still expand to £614 billion if the UK quit to pursue its own trade-friendly policies.
But if Britain stayed in an unreformed EU, London's GDP could be expected to grow to just £495 billion over the same period, while leaving the EU but failing to adopt a more outward-looking trade policy would limit it to £430 billion.
Mr Lyons told the Telegraph: "The best economic scenario for Britain over the next 20 years is to be in a significantly reformed European Union.
"But if, as an alternative, the UK leaves the EU on good terms, while adopting sensible outward-looking trading policies, that comes a very close second."
He added: "Britain can only achieve meaningful EU reform if it's serious about leaving.
"Our detailed study shows it's definitely a viable option for the UK to be outside the EU."
The Sunday Times quoted an unnamed source close to the mayor as saying: "Boris favours a renegotiation in which we stay in and complete the common market.
"He believes that is achievable by being bold about that renegotiation and not having that fear about leaving. If voters say that's not enough and we leave, the longer-term aspects of that are not as damaging as people might imagine."
Mr Cameron has said he hopes to be able to recommend voters opt to stay in the EU in the in/out referendum he has promised for 2017, following the planned renegotiation. Mr Johnson's expected comments are likely to increase pressure on him to make clear to EU counterparts that he is ready to recommend withdrawal if the renegotiation fails to deliver the reforms he wants.
A spokesman for the mayor's office confirmed Mr Johnson would make a speech to a business audience in London on Wednesday, but made no immediate response to reports of what he would say.
Matthew Elliott, chief executive of the pro-reform group Business for Britain, said: " Failure to change the damaging status quo of our relationship with the EU poses a huge threat to British business and in particular Britain's financial services.
"The mayor is absolutely right that we should seek serious reforms of our relationship with the EU, but also that we should not be afraid of the prospect of Britain leaving a stagnant EU.
"As Business for Britain research has shown, the City faces huge and growing threats from the eurozone. We need a robust strategy to bring back powers to the UK and make the EU more competitive, but this will only be possible if Britain is serious about leaving if the EU fails to reform."