David Cameron will use a speech to lure business back to the UK, reversing the trend of "offshoring" - where businesses relocate manufacturing and customer service to countries where overall costs are cheaper.
The Prime Minister is hoping cheap energy from shale gas and a pro-business regulatory climate could be the key to persuading firms to move "re-shore" back to the UK.
In a speech at the World Economic Forum in Davos, the PM will say companies are most likely to continue to house production in India and China, but argue the West should not be "written off".
According to Government figures, some 1,500 manufacturing jobs have already come back to the UK since 2011, and Business Secretary Vince Cable was today launching a new service called Reshore UK to help firms which want to do the same.
Asked if another economic bust is inevitable, David Cameron told Political Editor Tom Bradby: "Government's that claim to have abolished the trade cycle are making a big mistake."
Prime Minister David Cameron spoke to former European Commissioner and ex-Labour Business Secretary Lord Mandelson after bumping into him at the World Economic Forum in Davos.
Chancellor George Osborne has told ITV News the government will stick to its strategy of reducing spending on welfare while putting money into infrastructure and reducing the deficit.
He denied he was at odds with Deputy Prime Minister Nick Clegg who appeared to admit in an interview that the government had made a mistake in cutting infrastructure spending to steeply.
London Mayor Boris Johnson has said the government must "junk talk of austerity" in order to boost confidence in the British economy.
In a speech to business leaders in Davos, he said the government must "recognise that the single biggest inhibitor of demand is lack of confidence".
He added: "If only some of the people in this room would invest some of the cash in their balance sheets we would see that confidence rewarded in a virtuous circle.
"This morning's news demonstrates why the Chancellor is pursuing measures now that will boost confidence, further stimulate demand and bring growth, through investment in housing, transport and infrastructure."
Leading business figures have warned that David Cameron's plans to make companies release their tax affairs could undermine the economic recovery, according to the Daily Telegraph.
The Prime Minister yesterday launched an attack on corporate tax avoidance, saying it was time for businesses to "wake up and smell the coffee" - an apparent swipe at Starbucks.
A Conservative MP wrote to all of the FTSE 100 chief executives and 52 replied.
Out of those who replied, 32 of them warned the Government against publishing details of their tax affairs.
Nicolas Sarkozy was beaten in the French presidential elections last May and many thought he would disappear into private life.There's been talk he might even move to London to avoid his rival François Hollande's proposed 75% tax on top earners.
I gather that at a dinner in Davos last night he ruled out a move to the UK and hinted strongly that he may return to politics, saying he has more work to do. News perhaps for the current leader of Sarkozy's party, Jean-François Copé.
The Prime Minister's official spokesman confirms David Cameron has held meetings with his German, Italian, Dutch, Irish, Danish and Russian counterparts in Davos.