Speaking at a meeting in the European Parliament yesterday (30 September), Cable urged policymakers to tackle the issue aggressively or risk damaging the standing of the EU.
"At a time when national governments have to make very deep cuts, people can't understand why the Commission and Parliament would want to protect the EU budget," he said.
Cable, a highly respected economist with a background in academia and industry, became the first UK cabinet minster to address MEPs since the new Conservative-Liberal Democrat coalition took office in London.
He laid out the challenge facing the UK economy in stark terms, pointing to its large deficit, deflating property bubble and "overweight banking sector" and touted free trade as the route back to growth and prosperity.
Open markets are central to the EU project, said Cable, adding that the crisis had accelerated the shift in global economic power towards emerging economies like China, India, Brazil, Turkey and Indonesia.
These changes can be "disturbing and frightening", he said, but nationalism and protectionism would be counterproductive.
"I'm an old-fashioned unreconstructed believer in trade," Cable said, advocating a renewed push for progress on the Doha round of world trade talks.
"The EU will have to engage and make concessions if we want progress," he said, adding that the ultimate prize of increased trade would make compromise worthwhile.
Cable said he is looking forward to the Single Market Act due to be published by EU Internal Market Commissioner Michel Barnier next week. He said he hopes the document will include a section dedicated to helping small businesses overcome barriers to trade and restore energy to the economy.
Turning to the temporary state aid framework which made it easier for member states to help companies during the darkest days of the crisis, he said these measures should be wound up. "It is completely crazy to have cash-strapped governments competing to send cheques to profitable companies," said Cable.
He also hit out at the EU Working Time Directive for forcing people to work fewer hours than they want to, noting that some member states are "already ruing the day they introduced early retirement schemes".
Cable said the new UK government had no choice but to introduce major public spending cuts and is committed to engaging with EU partners to reform the European economic to meet the needs of a changed world.
