Davos 2012...

 

 

 

 

 Larry Elliott and Jill Treanor in Davos 

 

 

 

 The prime minister addresses the annual World Economic Forum in Davos, saying three things need to be done urgently in 2012: 'Greece, banks and firewall' Link to this video

 David Cameron urged eurozone leaders to follow Britain's "bold and decisive" action in dealing with its crisis as he warned that the continent was facing a "perilous" moment.

Addressing the annual World Economic Forum in Davos, the prime minister said three things needed to be done urgently in 2012 – "Greece, banks and firewall". He said the Greek situation needed to be resolved, banks recapitalised and an agreement reached on a new bailout fund for troubled eurozone countries.

He set out a stinging critique of the eurozone's current response to the crisis, and its long-term failure to make itself more competitive. Half of EU countries were less competitive than they were a year ago and five were less competitive than Iran. Since the start of the crisis the level of government debt per head of population in Europe had risen by €4,500 (£3,750), foreign direct investment had fallen by two-thirds, and nearly half of EU member states had nearly one-fifth, or more, of their young people out of work.

"This is not a moment to pretend there's not a problem. It's not the moment for fear of failure to hold us back," Cameron said.

He described the timing of a proposal for a financial transactions tax as "madness", saying the levy – also known as a Robin Hood tax – would cost 500,000 jobs in the EU and cut GDP by up to €200bn.

Setting out a defence of his own tough stance on cutting spending, he said "to be cautious would have been catastrophic".

"It is time for boldness", he said. "The [eurozone] crisis is still weighing down on business confidence," said Cameron, citing the rise in bond yields in Spain, Italy and Portugal from a year ago.

He was insistent that the veto he used before Christmas was not a sign that Britain wanted to leave Europe. "Let me tell you nothing could be further from the truth. Britain is part of the EU, not by default but by choice".

And he was here to win business: the UK is "unashamedly pro-business". "My message to you in this special Olympic year for Britain is to come to Britain, be part of this special year."

Last year at Davos he said 2011 would be a make-or-break year for the Doha trade liberalisation talks. Admitting that they had failed, he said countries should press ahead with "coalitions of the willing".

"Last year, at this very forum, world leaders called for an all-out effort to conclude the Doha round in 2011. We said it was the make-or-break year. It was. And we have to be frank about it. It didn't work," Cameron said.

"But let's not give up on free trade. Let's step forward with a new and ambitious set of ideas to take trade forwards."