Europe is being 'out-competed'

By Louise Armitstead, in Davos

Dismissing criticism of the UK referendum in a speech in Davos, the Prime Minister insisted that the EU had to “be frank" about its performance.

He said the bloc was being “left behind” global competitors, “leaving behind its people” and the European economy was a “big, looming problem”

In a passionate and energetic address to the World Economic Forum, he said Britain would use its G8 leadership to drive changes on “tax, trade and transparency”.

Anticipating criticism for “business-bashing”, he insisted he was “as pro-business leader as you can find".

"I yield to no-one in my enthusiasm for capitalism,” he said, “This is a vision of proper companies, proper taxes and proper rules….for the good of people across the world.”

Declaring that “aggressive tax avoidance” was a problem for “all countries, not just for Britain, he said the G8 needed to work together to stop the “traveling band wagon” of lawyers and consultants from moving on once tax loopholes are closed.

In a thinly disguised dig at international conglomerates such as Starbucks and Google that avoid corporation tax in the UK, Mr Cameron said: “Companies that don’t pay their taxes must wake up and smell the coffee, customers won’t put up with it.”

On trade, he said he would push for a full free trade agreement between America and Europe that he said would add €50bn to EU GDP.

He added that he would tackle “trade bureaucracy” at the World Trade Organisation meeting in Bali this year, saying it would boost global trade by £70bn.

Mr Cameron also promised to put a “turbo boost” under the drive for transparency in business and politics around the world to curb corruption and drive trade.

After angering his EU partners on Wednesday by announcing plans for a referendum on membership, the Prime Minister said of his push for change: "This is not about turning our backs on Europe. Quite the opposite.

"This is how I see it – just over half of EU countries are in the single currency. You move towards a banking union, towards a fiscal union and that has huge implications for those of us not in the euro, like the UK, and we are frankly not likely to ever join.

"It is not just right for Britain, it is right for Europe."