David Cameron delivered a scathing assessment of Europe’s failure to promote economic growth today as he urged it to be bold to promote business.

Mr Cameron said it was no time for tinkering and described European Union plans for a financial transactions tax as “madness”.

In a speech to the World Economic Forum in Davos, he was strongly critical of what he said were anti-competitive Brussels regulations and the flawed framework for the euro.

“In Britain we are taking the bold steps necessary to get our economy back on track, but my argument today is that the need for bold action at European level is equally great,” he said.

“Europe’s lack of competitiveness remains its Achilles heel.”

The annual gathering comes amid renewed gloom about the economy after the International Monetary Fund this week downgraded its forecasts for global growth.

Britain is facing the prospect of a return to recession after the Office of National Statistics reported a 0.2 per cent contraction in the UK economy in the final quarter of 2011.

Mr Cameron accused the EU, despite the economic challenge, of “doing things to make life even harder”.

He attacked the “unnecessary” regulations on business that can destroy jobs and said the proposed financial transactions tax could cost hundreds of thousands of jobs.

“Even to be considering this at a time when we are struggling to get our economies growing is quite simply madness,” he said.

The Prime Minister suggested the eurozone had none of the features common to successful currency unions like the US dollar and British sterling.

They were: “A central bank that can comprehensively stand behind the currency and financial system,”he said.

“And the deepest possible economic integration with the flexibility to deal with economic shocks, and a system of fiscal transfers and collective debt issuance that can deal with the tensions and imbalances between different countries and regions within the union.”

He added: “Currently it’s not that the eurozone doesn’t have all of these - it’s that it doesn’t really have any of these.”

In a message to his European counterparts, Mr Cameron went on: “This is a time to show the leadership our people are demanding.

“Tinkering here and there and hoping we’ll drift to a solution simply won’t cut it any more.

“This is a time for boldness, not caution. Boldness in what we do nationally – and together as a continent.”

But he sought to reassure his European counterparts that, despite vetoing a new EU Treaty to deal with the eurozone crisis in December, he wanted Britain to remain within the EU – contrary to the demands of some Tory backbenchers.

“To those who think that not signing the treaty means Britain is somehow walking away from Europe let me tell you, nothing could be further from the truth,” he said.

“Britain is part of the European Union. Not by default but by choice.

“It fundamentally reflects our national interest to be part of the single market on our doorstep and we have no intention of walking away.”

In the absence of a conclusion to the Doha free trade round, Mr Cameron proposed that a “coalition of the willing” could “forge ahead with more ambitious deals of their own”.

Free trade agreements with India, Canada and Singapore must be completed by the end of 2012, he said.

He will also call for the EU to “look at options for agreement” with the US and even strike a deal with Africa.

“This is a bold agenda on trade which can deliver tangible results this year, and I am proposing that we start work on it immediately.

“All these decisions lie in our own hands. The problems we face are man-made and with bold action and real political will we can fix them.”

He said Europe could only recover its dynamism if it was bold – “only if we fight for our prosperity, get to grips with the debt, take bold decisions on deregulation, on opening up the single market, on innovation and trade and address the fundamental issues at the heart of eurozone crisis.

“All these decisions lie in our own hands. They are the test of Europe’s leaders in the months ahead.

“Yes, the stakes are high, incredibly high. But there is nothing about the current crisis that we don’t understand.

“The problems we face are man-made and with bold action and real political will we can fix them.