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DAVOS, Switzerland (Reuters) - Prime Minister David Cameron called on Friday for Europe to launch a major drive to deregulate business, innovate and sign free trade pacts with Asia, the Middle East and Latin America.
"Europe has got to earn its way," Cameron told delegates in an address at the World Economic Forum (WEF) annual meeting. "The world doesn't owe us a living."
Pointing to the EU's free trade agreement with South Korea -- signed last year -- as a model, Cameron said Brussels should pursue similar deals with India, Canada, Latin America, the Middle East and the ASEAN economic bloc.
"We in Europe shouldn't be cautious about world trade, we should be actively, aggressively pushing for it," Cameron said.
He added his voice to calls for the Doha round of world trade talks to reach a successful conclusion this year but said it would not happen with more words.
Instead concessions were needed on agricultural safeguards and on industrial goods from emerging markets, he said, and more was needed from all sides on the area of services.
"2011 is the make or break year," Cameron said, referring to the Doha talks, which are in their tenth year.
The EU is hosting a dinner in Davos on Friday evening for trade ministers from the other key players -- Australia, Brazil, China, India, Japan and the United States.
Answering questions from the audience after his speech, the prime minister predicted that "pressure" within the eurozone would grow because "it's very hard for German taxpayers to understand why they must pay for other people in Europe who retire earlier than they do."
Restating his opposition to adopting the euro, Cameron nonetheless underlined it was in Britain's interest for the single currency to succeed and sort out its problems.
"A euro zone that doesn't confront its difficulties is not good for us. It's as simple as that," he said.
Cameron defended his programme of spending cuts and tax rises at home, saying it was essential to stick with it because there was no alternative.
Cameron and Osborne have faced down calls from Labour to ease its austerity measures after data this week showed a shock 0.5 percent contraction of the economy in the final quarter of 2010.
"It's going to be tough -- but we must see it through," Cameron said in his Davos speech. "The scale of the task is immense, so we need to be bold ... That's why we must stick to the course we have set out."
Europe as a whole needed to face the future with confidence and launch a major drive to deregulate business because it could not go on loading costs onto business, he said.
Leaders should commit to scrapping one regulation for each new one imposed, as well as reducing the regulatory burden overall, Cameron added.
The PM did not specifically address the question of financial regulation in his remarks, but did say European bank stress tests last year had not been tough enough.
"Last year's round of stress tests didn't go nearly far enough," Cameron said. "They said we were 3.5 billion euros short and six months down the line, the Irish banks alone needed ten times that.
"This year's tests have got to be tougher, stretching over a three-year period, covering liquidity as well as capital and involving independent bodies such as the IMF."
Cameron also issued a stout defence of liberal democracy, saying authoritarian capitalism was not the answer.
"Good ideas come through freedom, through free thinking, through free association of like-minded people. Our values also create the right climate for business too," he said.
"...these values aren't some quaint constitutional add-on. They are an integral and irreducible part of our success today and in the future and we must never forget that."
Additional reporting by Dmitry Zhdannikov, Paul Taylor and Matt Falloon; editing by Patrick Graham