Excessive public debt is the greatest threat to prosperity in Europe. German Chancellor Angela Merkel said on Friday, insisting that other EU countries should follow Germany's example of austerity.

Speaking to business and political leaders at the annual World Economic Forum, Merkel said savings measures and growth are not opposites. She pointed out that Germany has cut spending in the last two years and had growth of 3.6 percent last year.

Merkel also called for a quick completion to trade talks, saying free trade is probably the most simple way to really encourage growth worldwide. She said it is also the fairest way and the completion of the Doha round of talks is of utmost importance.