Reinfeldt and Cameron call for EU deficit action

Sweden's Prime Minister Fredrik Reinfeldt has joined forces with UK Prime Minister David Cameron to call for "less talk and more action" to ensure that Europe tackles its economic crisis as EU premiers head to Brussels for crisis talks.

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In an opinion article in the UK Financial Times on Thursday, Reinfeldt and Cameron lay out "four clear steps" which they argue are needed to ensure that Europe "thrives and prospers".

"First we need to get a grip on our debts," the pair write, underlining that as "Sweden has been living within its means it is one of the member states that has weathered the crisis best".

Cameron concedes that Britain's situation is in contrast to Sweden's and does not mince his words when apportioning blame for the parlous state of UK state finances.

"In Britain, on the other hand, the new coalition government has inherited the largest budget deficit of any EU country."

Reinfeldt and Cameron argued that measures to address the current bout of fiscal difficulties will not be enough and have called for a broader longer-term approach to ensure "that debt crises of this magnitude can never happen again".

"Countries across Europe need fundamentally to change the way they deal with public finances... There must be better safeguards against member states spending and borrowing too much and an early-warning system to identify problems before they get out of hand," they write.

The financial services sector is identified as an industry in need of sweeping reform.

"The EU should also lead the way in driving international movement towards a new levy on financial institutions, similar to that which Sweden has put in place," referring to the Swedish stability fund which is an annual fee, enacted at the end of 2009 and paid by all banks based on their liabilities minus equity.

The third proposal addresses growth and underlines that Europe's strengths are many - competitive skilled workers, technological excellence and integrated markets - but identify that productivity is in decline.

"Our average growth rate is lower than the US, India and China. And we are sitting on a time bomb - with ageing populations and too many people out of work," Reinfeldt and Cameron warn.

The leaders exemplified one area in particular need of urgent change.

"It is shocking that in many parts of Europe women still do not have equal rights in the workplace. This is not just unfair; it makes no sense - because it deprives our economies of their full potential as workers and consumers," they write.

The fight against protectionism is the final element of Reinfeldt and Cameron's proposal. The pair recognize that "in difficult times there is a temptation to turn inwards" but warn that this would be a counter-productive response.

"The EU is the world's largest exporter. It thrives and survives on open markets."

Reinfeldt and Cameron concluded by pledging their faith in the "strengths and potential" of the union and warned EU leaders ahead of the Brussels meeting that the time had come to "stop talking and start taking action - on debt, on fixing the banks, on creating the conditions for growth, on promoting free trade."