* Britain holds investment summits ahead of Games
* UK PM Cameron hopes for business deals to help economy
* Cameron reaffirms commitment to austerity plan
By Mohammed Abbas and Olesya Dmitracova
LONDON, July 26 British Prime Minister David
Cameron urged global business leaders gathered in London on
Thursday to invest in Britain, which despite the glamour of the
Olympics is still reeling from the worst economic slump since
the Great Depression.
Cameron's appeal came a day after fresh data showed the
economy shrank far more than expected in the second quarter,
battered by everything from an extra public holiday to the euro
zone crisis, raising fresh calls for a new rescue plan.
However, Cameron and finance minister George Osborne said
they were resolute in seeing through their seven-year austerity
plan to cut Britain's budget deficit, and were backed by the
Organisation for Economic Co-operation and Development (OECD).
"Yes, I want medals for Britain. And there will be no more
passionate supporter of Team GB than me. But I've got a job to
do this summer. A big part of that job is to get behind British
business," Cameron told the high-powered audience.
High-flyers from the world of business and finance and key
policy makers attended the investment summit, the first of
several designed to capitalise on July 27 to Aug. 12 Games,
including International Monetary Fund Managing Director
Christine Lagarde and Google's Executive Chairman Eric Schmidt.
"We've taken bold decisions to sort out our public finances
and earn credibility with the markets .... And my message today
is clear and unequivocal. Be in no doubt: we will go on and
finish the job," Cameron added, deflecting calls to re-think his
government's flagship austerity programme.
Cameron also reaffirmed his commitment to improve regulation
of Britain's banking sector, whose reputation has been hit by a
bank rate-fixing scandal in recent weeks.
The British public are suffering the harshest austerity
squeeze for a generation, and are increasingly losing confidence
in the government's cost-cutting drive as successive economic
reports show little improvement in Britain's finances.
"TONNE OF BRICKS"
Osborne, who is under increasing pressure amid speculation
he could be replaced, said he would not waiver on austerity.
"You will hear those arguing that we should abandon our plan
and spend and borrow our way out of debt. You hear that argument
again today. These are the siren voices luring Britain on to the
rock. We won't go there," Osborne said.
OECD Secretary-General Angel Gurria echoed his view.
"There are particularly acute dangers on appearing to waver
or appearing to hesitate or appearing to lose a little bit of
nerve," he said at the summit, adding to his comments earlier
that financial markets would come down on Britain "like a tonne
of bricks" if it wavered on deficit reduction.
Instead, the government is trying to boost foreign
investment and stimulate the private sector, and hopes the
Olympic Games - the first to be held in Britain since 1948 -
will showcase Britain as a business destination.
Cameron hopes that will help assuage critics who see the 9.3
billion pound (14.5 billion) cost of hosting the Olympics as too
expensive given Britain's strained finances.
Britain reported this week a gain of nearly 53,000 new jobs
in the 2011-12 financial year from inward investment, an annual
rise of 26 percent.
However, figures from the United Nations World Investment
Report show that $54 billion of foreign direct investment in
2011 is only a fraction of the $196 billion recorded in 2007,
before the global banking crisis.
Britain's economy may be faltering, but financial markets
for now appear to still have confidence in Cameron's austerity
plan and Britain's borrowing costs remain relatively low.
Bank of England Governor Mervyn King , European Central Bank
President Mario Draghi and Mexico and Brazil's central bank
chiefs all warned of the deep challenges facing the wider global
economy and Britain's euro zone trading partners in particular.
Lagarde also warned of the risks facing the United States,
and the danger of higher oil prices due to geopolitical jitters.
"Europe is obviously in the epicentre of the (global) crisis
at the moment but the U.S. is still at risk," she said.
"Risk number one starting west is clearly the fiscal cliff in
the United States of America where the deficit and debt to GDP
(Gross Domestic Product) are worse than in the euro zone ....
there's great uncertainty about how congress is going to deal
with this fiscal cliff," she added.
Despite the economic gloom, London's mayor Boris Johnson
sought to give a more upbeat outlook.
"In the coming weeks, with major global investors in town
for the Games, I am embarking on a gigantic schmooze-athon, to
highlight this and the wealth of other amazing investment
opportunities that exist," he said.