Cameron calls for EU changes to drive growth

Europe must set a new direction for its economic policy by strengthening the single market, prompting enterprise and innovation, and sealing free trade pacts with fast-growing economies such as India and other economic groupings such as Asean, David Cameron and eight other EU leaders have said.

In a letter to the president of the European Council, Herman Van Rompuy and the European Commission president, Jose Manuel Barroso, the leaders said that "without stronger ambition and fundamental reform" Europe faced a "future of low productivity, high unemployment, lost investment and relative economic decline".

The letter was signed by Mr Cameron and his counterparts from the Netherlands, Sweden, Denmark, Finland, Estonia, Poland and Latvia. The President of Lithuania was also among the leaders who put their name to the letter, but both the French President, Nicolas Sarkozy, and the German Chancellor, Angela Merkel, were conspicuous by their absence.

Highlighting the importance of "putting public finances on a sustainable footing" , the leaders called on the Commission to report on ways to open up the EU services sector, and to take steps to forge free trade deals with India, Canada, Japan and the Mercosur and Asean groupings. The EU should also do "all it can" to facilitate a conclusion of the Doha round of international trade talks, they said.

"Europe stands at a junction," they argued. "Before us lie two very different paths: a path of least resistance, built on the policies of the past and reinforcing economic decline; and a new direction for Europe ... leading to stronger growth and prosperity."