It gives me great pleasure to introduce the Prime Minister of the United Kingdom,

Mr. Cameron.

I think we are very privileged after having listened yesterday to Chancellor Merkel,

to hear now the Prime Minister talking about his vision for the future of the world,

and for the future of Europe and, I should add, the Euro.

So Prime Minister of the United Kingdom, please welcome.

Thank you very much.

Thank you Klaus for that introduction.

And it's great to be back the World Economic Forum in Davos.

But we meet today at a perilous moment for economies right across Europe.

Growth has stalled, unemployment is rising,

the prospect of Europe getting left behind is all too apparent.

While China grows at 8%, India at 7% and Africa at 5.5%,

the European Commission forecasts that the EU will grow by just naught 0.6%

in the whole of 2012,

and even that is assuming that the problems in the Eurozone get better, not worse.

Yesterday, in Britain,

we had the official figures for the final quarter of the last calendar year,

and they were negative.

Other the large economies of Europe are forecast to have a similar outcome or worse.

In just four years, government debt per EU citizen, has risen by ג‚¬ 4,500.

Foreign direct investment has fallen by around two thirds,

and in more than half of EU member-states, a fifth of all young people are now out of work.

So this is not a moment to try and pretend there is not a problem,

nor is it a moment to allow the fear of failure to hold us back.

This is a time to show the leadership that our people are quite rightly demanding.

Tinkering here and there and hoping we'll drift to a solution,

simply isn't going to cut it anymore. This is a time for boldness, not for caution.

Boldness in what we do nationally,

but boldness also in what we do together as a continent.

Now, in Britain, we've had to be bold.

We were faced, as we came into government,

with the biggest budget deficit in our piece- time history, more than 10% of our GDP.

We had the most leveraged banks, the most indebted households,

and the biggest housing boom. To be cautious would have been catastrophic.

Instead, we were bold and decisive.

We formed the first coalition government for 70 years.

We legislated for a fixed term five-year parliament,

which has helped to give people the confidence of stability and credibility.

We put forward an aggressive set of plans to get our economy back on an even keel.

Five and a half billion pounds saved inside the first financial year,

the one that was already underway.

Welfare bills, cut. The cost of government, cut.

Public sector pay, frozen. The state paid pension age increased.

Let me give you one example, the reform of public sector pensions.

This is a difficult issue for any government.

We want public servants to have good pensions. We've insured that that is the case,

but at the same time, we've actually cut the long-term cost in half.

By taking bold decisions to get to grips with the debt,

Britain has shown that it is possible to earn credibility and get ahead of the markets.

Our borrowing costs have fallen to the lowest for a generation,

and we will be equally bold in meeting our key ambition, which is to support enterprise,

and to make Britain the best place in the world in which to start or to grow a business.

So, we are pursuing an unashamedly pro- business agenda, scraping needless red tape,

simplifying planning, reviewing all regulation,

creating the most competitive business tax regime in the developed world,

with corporation tax coming down to 23%.

We're making bold investments in new infrastructure, including high-speed rail.

And while we may be fiscal conservatives, we are monetary radicals.

We are injecting cash into the banking system, and introducing credit-easing measures

to make it easier for small businesses to access finance.

So my message to you, in this special Olympic year for Britain,

is that we are a country that is absolutely committed to enterprise and to openness.

Come to Britain, invest in Britain. Be part of this special year in a truly great country.

So yes, in Britain,

we're taking the bold steps necessary to get our economy back on track.

But my argument today,

is that the need for bold action at the European level is equally great.

Europe's lack of competitiveness is its Achilles' heal.

For all the talk,

the Lisbon strategy has failed to deliver the structural reforms that we need.

The statistics are pretty staggering.

As measured by the World Economic Forum, more than half of EU member-states

are now less competitive than they were this time last year,

while five EU member-states

are now less competitive than a country that is pretty sclerotic, Iran.

For every Euro invested in venture capital in the EU,

five times as much is being invested in the US.

Our single market, one of our greatest strengths, remains incomplete,

and there are still a colossal 4,700 professions across the European Union

to which access is regulated by government. And that is not all.

In spite of the economic challenge, in spite of the unemployment challenge,

we're still doing things through the EU to make life even harder.

In the name of social protection, the EU has promoted unnecessary measures

that impose burdens on businesses and governments and can destroy jobs.

The Agency Workers Directive, the Pregnant Worker's Directive,

the Working Time Directive, the list goes on.

Then, of course, there is the proposal for a financial transactions tax.

Now, of course, it is right that the financial sector should pay their share,

and in the United Kingdom we're making sure that's the case with a bank levy,

and with the fact that we charge stamp duty on shares.

And these are options that other countries can adopt.

But if you look at the European Commission's own original analysis,

that showed that a financial transactions tax could cost the GDP of the European Union,

and could reduce it by ג‚¬ 200 Billion. It could cost almost 500,000 jobs,

and force as much as 90% of some markets away from the European Union.

Even to be considering this at a time when we're struggling to get our economies growing,

is quite simply madness. It shouldn't go on like this.

That is why Britain has been arguing for a pro-business agenda in Europe.

This is not just a British agenda.

Over the last year, we have spearheaded work with 15 other member-states across the EU,

both inside and outside the Eurozone.

This weekend, Chancellor Merkel and I called for a package of deregulation,

and liberalization policies.

And our ideas now lie at the heart of what the European Commission is promoting too.

Together, we're pushing for the completion of Single Market in services and in digital.

Those two things could add alone, ג‚¬ 800 Billion to EU GDP,

and they could lead the drive to exempt micro- businesses for excessive regulation,

both new and existing.

But I believe, we need to be bolder still, so here is the checklist.

All proposed EU Measures should be tested for their impact on growth.

We need a target to reduce the overall burden of EU regulation.

And we need a new proportionality test to prevent needless barriers-to-trade in services

and to slash the number of regulated professions in Europe.

That together with our international partners,

we also need to take decisive action to get trade moving.

Now, I'm not going to give you the standard speech on Doha.

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 a make-or-break year, it was.

And we have to be frank about it, it didn't work.

But we must not give up on free trade.

Let us step forward with a new and ambitious set of ideas to take trade forwards.

First, rather than trying to involve everyone at once,

let us get some bilateral deals done.

Let's get the EU Trade Agreements with India, with Canada, with Singapore,

finalized by the end of this year.

Completing all the deals now on the table, can add ג‚¬ 90 Billion to Europe's GDP.

And let's also look at all the options on the table for agreement between the EU and the US,

where a deal can have a bigger impact than all of the other agreements put together.

Next, let's be more creative in the way we use the multi-lateral system.

Far form turning our back on multi-lateralism, we need the continued work of the WTO

to prevent any collapse back to protectionism,

to ensure we take a candid interest of the poorest countries in our world,

and to ensure that the WTO framework is fit for the 21st century.

And I also believe that it means, going forwards,

perhaps with a coalition of the willing, so countries who want to,

can forge ahead with more ambitious trade deals of their own,

consistent within the WTO framework.

Now, there are some proposals out there already, like the Trans-Pacific Partnership,

but why not also an ambitious deal between Europe and Africa,

or even a Pan-African Free Trade Area.

This is a bold agenda on trade,

which can deliver tangible results for the world economy this year,

and I'm proposing that we start work on it immediately.

Now, of course, the most urgent question facing all of Europe right now,

is how to deal with the Eurozone crisis.

And this is where, I believe, Europe needs to be boldest of all.

Vital progress has been made.

The European Central Bank

has provided extensive additional support to Europe's Banks.

Many Eurozone countries are taking painful and difficult steps to address their deficits,

and to give up a degree of sovereignty

over the governance of their economies in the future.

And, of course, there was the agreement to set up the firewall.

Now, all of these are welcome and necessary steps,

and I don't underestimate for one moment,

the leadership and the courage that has got us this far.

But we need to be honest about the overall situation.

The crisis is still weighing down on business confidence and weighing down on investment.

A year ago, bond rates where 5% in Spain, nearly 5% in Italy,

and more than 7% in Portugal.

Today, they are still 5% in Spain, up to 6% in Italy, and 14% in Portugal.

So, we still need those urgent short-term measures to be properly put into effect.

The October agreement needs to be fully implemented.

The uncertainty in Greece has to be brought to an end.

Europe's banks must be properly recapitalized.

And, as the IMF has said, the European Firewall

needs to be big enough to deal with the full scale of the crisis,

and the potential contagion.

And Chancellor Merkel is absolutely right to insist that Eurozone countries

must do everything possible to get to grips with their own debts.

But we also need to be honest about the long- term consequences of a single currency.

Now, I'm not one of those people who think that single currencies can never work.

Look at America. Look at the United Kingdom.

But there are a number of features that are common to all successful currency units.

A central bank that can comprehensively stand behind the currency,

and the financial system.

The deepest possible economic integration with the flexibility to deal with economic shocks,

and a system of fiscal transfers,

and collective debts issuants that can deal with tensions,

and the imbalances between different countries and regions within the Union.

Currently, it's not that the Eurozone doesn't have all of these,

it's that it doesnג€™t really have any of these.

Now, clearly, if countries are close enough in their economic structure,

then tensions are less likely to arise.

But when imbalances are sustained,

and some countries do better than others year after year, you can face real problems.

That is what the current crisis is demonstrating.

Now, of course, private capital flows can hide these problems for a while.

In the Eurozone, that is what happened.

But once markets lose confidence and dry up, you are left in an unsustainable position.

Yes, tough fiscal discipline is essential, but this is a problem of trade deficits,

not just budget deficits.

And it means countries with those deficits making painful decisions to raise productivity,

to drive down costs year after year to regain their competitiveness.

But that doesn't happen over night, and it can have painful economic,

and even political consequences.

Nor, in fact, is it sufficient. You still need the support of single-currency partners,

and as Christine Legarde has set out, a system of fiscal integration and risk sharing,

perhaps through the creation of Europe-Area bonds, to make that support work.

As Marion Monty has suggested, the flip- side of austerity in the deficit countries,

must be actioned to put the weight of the surplus countries behind the Euro.