German chancellor Angela Merkel has expressed “conditional optimism” for the euro zone once reform and austerity efforts continue.

The German leader appeared to support British prime minister David Cameron’s call for greater measures to boost competitiveness and jobs. However, she warned “not to push for a rapid economic dynamic at all costs, but one that survives shocks”.

In an address to the World Economic Forum (WEF) she said she’d seen many “interesting views” of Davos this year “and not just of the mountains, but also of economic developments”.

Despite low EU growth forecasts, she reminded the audience of EU progress to agree binding budgetary rules and a common banking regulator. The coming year would, she said, require further efforts by EU countries to restore confidence.

“In 2013 we have to work on how to be sure that we have greater coherence in EU competitiveness,” she said, citing plans for binding bilateral agreements between member states and the European Commission.

ECB intervention

The German leader urged leaders against complacency in the euro zone crisis lull, which she put down largely to intervention by the European Central Bank (ECB).

“The ECB has done a lot but the politicians have to do their homework too,” she said. “The ECB won’t be able to cover over macro economic weakness for ever.”

She backed David Cameron’s stated G8 goals to tackle tax evasion and fraud and called for greater efforts to regulate the so-called “shadow” banking sector.

“Shortly after the crisis in 2009 we all agreed that every banking centre, actor and product should be regulated, but we are still far away from that,” she said.

Dr Merkel closed her Davos appearance with a plea for investors to help crack Europe’s youth unemployment problem.