* UK PM says weak economy could damage standing in world
* Cameron says fears of British decline are overdone
(Adds quotes, deletes one phrase cut from delivered speech)
By Matt Falloon
LONDON, Nov 15 (Reuters) - Britain's global influence is not in decline but the country must repair its economy quickly to remain a leading actor on the world stage, Prime Minister David Cameron said on Monday.
Britain is recovering from its worst recession since World War Two but Cameron said the rise of new economic powers did not spell the end of British influence and the country remained a major economic and military power.
"There are some who say Britain is embarked on an inevitable path of decline," Cameron said in a major foreign policy speech in London's financial district. "I want to take that argument head on. Britain remains a great economic power."
Cameron came to power in May at the head of a coalition that is determined to slash public spending after a banking crisis and a deep recession sent the budget deficit soaring to 11 percent of national output, a peacetime record.
The squeeze on public spending will lead to cuts in defence and public services and could throw half a million government employees out of work.
Cameron said foreign leaders respected Britain's determination to "get our economic house in order", which was essential if the country was to continue to carry weight in the world.
"Economic strength will restore our respect in the world and our national self-confidence," he said.
UK economic growth has been stronger than expected this year but a slowdown is expected in 2011, largely because of the government's efforts to slash the deficit.
HARD-HEADED APPROACH
Cameron pledged to defend London's position as a leading world financial centre. A European Union drive for tighter regulation of hedge funds and private equity groups -- many of which are based in London -- following the financial crisis led to fierce battles between Britain and France.
"I can promise you this: We will stand up, at each and every turn, for our financial services industry and the City of London," he said.
He hailed the release of Myanmar pro-democracy leader Aung San Suu Kyi, saying it was a "fantastic sight" to see her free.
Cameron has recalibrated British foreign policy to focus on fostering business ties across the world in an effort to boost exports. Britain has 9,500 troops in Afghanistan, the second biggest foreign force, but defence cuts mean it will not have an aircraft carrier equipped with fast jets for the next decade.
"We ... have to be more strategic and hard-headed about how we go about advancing our national interests," Cameron said.
Britain's relationship with the United States is "crucial" because of close bilateral cooperation on defence, counter-terrorism and intelligence, Cameron said. Britain was a "strong and active" member of the 27-nation EU, he said.
But he said there were other areas where British policy needed to change. "We must link our economy up with the fastest-growing parts of the world, placing our commercial interest at the heart of our foreign policy," he said.
Britain will apply the "more strategic and hard-headed" approach to the mission in Afghanistan and will focus more of its foreign aid budget on preventing conflict, he said. (Additional reporting by Adrian Croft; Editing by Susan Fenton)