German chancellor Angela Merkel says she can work with Britain to reform the European Union but it will not be "a piece of cake".
Mrs Merkel and Mr Cameron at a Downing St news conference on Friday. Photo: AFP
After a Downing St meeting, British prime minister David Cameron said he and Mrs Merkel "both want to see changes in Europe". He added that EU rules on freedom of movement needed to change to ensure people could not move from country to country to sign up for welfare payments (so-called "benefit tourism").
Mrs Merkel said Britain and Germany could pass laws to limit this problem, as freedom of movement is intended to allow people to work in different countries, not "having immigration into social systems".
However, speaking of changing the EU, she said: "It is not a piece of cake. It is going to be hard work."
Earlier, Mrs Merkel addressed both Houses of Parliament - the first German politician to speak at a joint session of both houses since the reunification of her country almost 24 years ago.
"Some expect my speech to pave the way for a fundamental reform of the European architecture which will satisfy all kinds of alleged or actual British wishes," she said. "I am afraid they are in for a disappointment.
"Others are expecting the exact opposite and they are hoping that I will deliver the clear and simple message here in London that the rest of Europe is not prepared to pay almost any price to keep Britain in the European Union. I am afraid these hopes will be dashed."
Mrs Merkel, who started her speech in English, hailed the peace and stability she said the European Union had brought, saying war between EU member states was now "inconceivable".
She praised the "unparalleled success" of the EU free market - and the freedoms she said European integration had delivered - but stressed that "we need to change the political shape of the EU in keeping with the times".