The economic recovery was “always going to be choppy” but Britain must “stick to the course” if it wants to come through the recession, the Prime Minister has said.
David Cameron said there must be a “genuine single market” in Europe, while markets should be deregulated so businesses can grow.
He said stress tests for banks must be more stringent, describing 2011 as a “make or break year” for economic recovery.
In a speech to some of the world’s most powerful business leaders and politicians at the World Economic Forum in Davos, Switzerland, Mr Cameron said that while economies like Brazil, China and India were “steaming ahead”, the “drag on growth” in Europe had persisted.
He said: “This week we had disappointing growth estimates back home. Yes, they were partly driven by the terrible weather which shut down airports, factories and schools – but let’s be frank.
“They also brought home something we have said for months: given the traumas of recent years, the recovery was always going to be choppy.”
Mr Cameron said it was “not going to be easy” to re-invigorate the economy but to do so Europe “needed to change direction”, saying “huge deficits don’t just fall out of the sky”.
He added: “To get there isn’t easy. We can’t just flick on the switch of government spending or pump the bubble back up. Making this transformation – and it is a transformation – requires painstaking work and it takes time.
“It’s going to be tough – but we must see it through. The scale of the task is immense, so we need to be bold in order to build this economy of the future.
“The British people know these things. They understand there are no short cuts to a better future. And already we’re making progress.”