In his first major EU initiative since becoming prime minister, David Cameron is forging an Anglo-Dutch alliance to revive liberalising reforms that would see the creation of a mini-free market in Europe allowing professional and service workers, from lawyers and accountants to builders and hairdressers, to ply their trades anywhere in the continent.

Cameron discussed the idea yesterday with Mark Rutte, the premier of the Netherlands, during talks in Downing Street. A member of the conservative-liberal People's Party for Freedom and Democracy, he has been prime minister since the party won the highest number of votes cast in a general election in October last year.

The reform move is seen as a way of showing the EU that Britain can form alliances to boost growth and competitiveness, and to try to change the perception of the Tories as anti-European.

The mechanism the two prime ministers want to use is the EU's services directive, a liberalising measure that allows professionals to offer their services anywhere in the EU. The directive's introduction has been stalled by the French but it is seen as an important element in completing the single market.

In an interview with the Guardian, the Anglophile Rutte said: "We need to get [the EU's] growth engine going again. So one of the ideas we will explore further is how we can get the services directive up and running. The services directive has been watered down, and nothing has been left, because countries could not agree."

He pointed out that under the Lisbon treaty a small group of states – as few as nine – are entitled to press ahead with an initiative under what is described as enhanced co-operation.

He said: "We want to form a mini-single market for all the professional services, and then obviously the hope is that all 27 countries would like to join, even if some are currently vehemently opposed.

"I am absolutely convinced the Scandics, the Baltics and other countries will be willing to group together to have the original services directive implemented."

Rutte and Cameron first discussed the idea of pressing ahead with a mini single market in services when they were in opposition two years ago, and Rutte clearly believes Cameron, Clegg and he can form an alliance with Nordic countries to reshape the EU.

He said: "Cameron has been really pragmatic on Europe. He does not approach it on an ideological level.

"The best way to fight Euroscepticism is to discuss growth. The narrative of ever closer union, the old story, does not fly in the UK, and it does not fly anymore in the Netherlands. What is flying is a narrative about growth and prosperity".

Rutte, the first liberal to be elected Dutch PM since 1918, has formed a coalition with Christian Democrats, but must also rely on support from the anti-Islamic PVV party for a majority in parliament.

He said: "We have got to get out of this European agenda of how we manage decline. If I have learned one thing from Margaret Thatcher, it was that she did not want to manage decline. She wanted to sail the oceans, and we want Europe to sail the oceans."

Rutte is likely to be a strong partner for Cameron and Nick Clegg, who speaks the Dutch language. Like Cameron, he is pushing through a deficit reduction programme worth €18bn and designed to bring the Netherlands' deficit down from 6% to 0.9 % of GDP by 2015.

He also said he was trying to implement his own version of the big society in his own country, saying: "Sometimes I think the state has evolved into a happiness machine, but for me, as a liberal, happiness does not derive from the state but belongs in individual citizens. The state should be there for those that really need it, and to run those services for everyone's daily lives, like security." He said he was introducing welfare responsibility on the model of Iain Duncan Smith.

Rutte also made a strong defence of his government's decision to ban the burqa. The prime minister said: "We don't want the burqa on the streets. We find it anti-women and anti-emancipatory. It is a symbol of suppressing women. We want to see somebody's face. On the streets, I want to see your face, I need to look you in the eye and have a feeling for what you are thinking. With a burqa the face is totally dark.

"We expect people to speak the language to understand our western values. It is all very fine if you are a Muslim or a Hindu, but still we expect you to respect the position of women in society and homosexuals, and we do not compromise."

He said the next task was not to end multi-culturalism – that debate was over 20 years ago – but how to decrease the number of immigrants by increasing income, age integration and language requirements.

He is also demanding far stricter EU surveillance of the economies of euro member country, including automatic sanctions against those that do not comply with the terms of the EU stability pact, multi-annual budget surveiillance, and an independent statistical service.

He claimed the Germans were shifting to his position.

• This article was amended on 25 January 2011. The original referred to the anti-Islamic VVD party. This has been corrected.