Nicholas Watt — Reform EU or Britain quits - George Osborne lays down ultimatum

Osborne will tell the conference: "The biggest economic risk facing Europe doesn't come from those who want reform and renegotiation – it comes from a failure to reform and renegotiate. "It is the status quo which condemns the people of Europe to an ongoing economic crisis and continuing decline." Osborne will say the EU suffers from a chronic lack of competitiveness and that the European economy has stalled over the last six years while the Indian economy has grown by a third and the Chinese economy by 50%. He will say: "Make no mistake, our continent is falling behind. Look at innovation, where Europe's share of world patent applications nearly halved in the last decade. Look at unemployment, where a quarter of young people looking for work can't find it. Look at welfare. "As Angela Merkel has pointed out, Europe accounts for just over 7% of the world's population, 25% of its economy, and 50% of global social welfare spending. We can't go on like this." Osborne is expected to say that Cameron will press for a realignment of the rules of the single market to ensure the 18 members of the eurozone cannot outvote the 10 EU members, such as Britain, which have not joined the single currency.