UK Prime Minister David Cameron late on Thursday launched an attack on his European counterparts at the World Economic Forum about their planned transaction tax “madness.”

Cameron said the introduction of such a tax could cost half a million jobs and cut Europe's economic output by around €200bn.

He also risked upsetting relations with Germany in the run-up to the European summit next week by telling Germany it needs to play a bigger role in protecting the euro because “bold and decisive action” is required.

He told the Davos assembly that in spite of the UK rejecting the new EU treaty he wants the country to remain within the EU. He said: “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.”