Germany 'constructive' over EU bid
Germany wants to play a "constructive" part in Britain's bid to renegotiate its relations with Brussels, Angela Merkel said, as she insisted "where there's a will there is a way" following talks with David Cameron.
In a significant boost to the Prime Minister's bid to reform the European Union, the Chancellor did not rule out treaty change.
Germany has "clear cut hope" that Britain will remain a member of the EU but negotiations are set to be "protracted", she said following the talks in Berlin.
Mrs Merkel said: "Of course we have the desire to work very closely together. We would like to be a part of the process that is going on in Great Britain at the moment and we would like to be a constructive partner in this process.
"I have also said wherever there is a desire there's also a way and this should be our guiding principle here as well."
The talks mark the end of Mr Cameron's whirlwind tour of European capitals to secure support for his renegotiation bid.
He said: "Of course there is no magic quick solution, but as the Chancellor has said on this previously, and again today, where there's a will there is a way.
"The European Union has shown before that when one of its member states has a problem that needs sorting out, it can be flexible enough to do so, and I have every confidence that it will do so again.
"The European Union is better off with the United Kingdom as a member and I believe that Britain's national interest can best be served by staying in the European Union on the basis of a reformed settlement.
"That is what we both want to happen and that is what we will work together in the coming months to achieve."
Mr Cameron believes treaty change is required in order to deliver real reform in key areas such as welfare but France and Germany have previously been cool about such a move.
The Chancellor said she was sure they would find common ground with Britain over the reforms of the Single Market "very quickly" and left open the possibility of treaty change.
She said: "Is it necessary to change the treaty? Can it be changed via a secondary process? If you are convinced of the content or the substance then we shouldn't be saying 'to change the treaty is totally impossible'."
Mr Cameron said he was "heartened " by Mrs Merkel's comments.
He said: "What matters is the content, the substance of what needs to change.
"My view is clear - the substance requires changes to the treaty, but let's get this substance sorted out first, discuss that and then move ahead and move on and make the changes that are necessary.
"I was very heartened by what the Chancellor said in terms of where there is a will there is a way and if content requires changes in treaties, then you can't let that stand in the way of what needs to be done.
"I'm clear that the outcome, what we want here, is the changes that address the concerns that people have.
"As we address those, then I think people will see that it is right for Britain to stay in a reformed EU.
"This is about starting a process - of course it is going to be difficult, of course there are going to be disagreements, of course there are going to be days when it looks like it is going well, days when it looks like it is going badly.
"The important thing is to get it under way and then you can judge it at the end of the process, rather than taking the temperature of the process every day on the way through."
The powerful German Chancellor will prove crucial to the success of Mr Cameron's bid to overhaul the EU and the tone of Mrs Merkel's comments are likely to be welcomed by Downing Street.
But in an earlier meeting with his Polish counterpart, the Prime Minister failed to secure support for his plans to restrict benefits for migrant workers.
No 10 said Mr Cameron and Ewa Kopacz found "much they could agree on" during talks in Warsaw but plans for benefit reforms "should be discussed further".
Poland has repeatedly condemned proposals to curb welfare for migrant workers as "discriminatory" and pledged to block them.
Poland's minister for European affairs, Rafal Trzaskowski, told Sky News: "David Cameron says he does not question the free movement of workers per se, but he wants to discuss the questions of social policy and of social benefits.
"Our message was clear. We think it is of utmost importance for all of us to keep the United Kingdom within the European Union, and we are ready to sit down with the British and discuss the issues.
"But obviously, our red line is non-discrimination. We have to take such decisions that are not going to discriminate against anyone within the Union. These are going to be tough discussions, but we are open to talks with our British counterparts."
A Downing Street spokesman said: " On immigration and welfare, Prime Minister Kopacz welcomed the PM's commitment to respect the principle of free movement. They agreed that there were issues concerning the interaction between free movement and national welfare systems that should be discussed further."
Mr Cameron said he believed he had made "some good progress" in his earlier talks with Ms Kopacz.
"We agreed that this is not about trying to get rid of freedom of movement," said the PM. "It's right there is freedom of movement to go and take a job and live in another European country. That's one of the fundamental tenets of the European Union and many British people take advantage of that by going to work and live in other European countries.
"But we've got to make sure, though, that our welfare systems are not acting as an unfair or unnecessary draw to countries. It's not about discrimination, it's about making sure that there's proper national determination of welfare systems."
Mr Cameron made clear that he remains ready to recommend a No vote in the in/out referendum if he is unable to negotiate acceptable terms for the UK's membership.
"I don't go into a negotiation expecting to fail, I go into a negotiation hoping and expecting to succeed," he said, insisting he was "confident" of achieving agreement on issues like competitiveness, welfare for migrants and the EU's commitment to "ever closer union".
But he added: "I've always said if I was to achieve none of these things then I rule nothing out, and I meant what I said by that. But I expect and hope and believe that Europe can show the flexibility that when one of the larger countries, a big contributor, a major European player, has some problems and issues, that those issues can be properly addressed, and I'm confident that they can."
Mrs Merkel said the pair had not discussed the UK's possible response if talks fail.
"We didn't talk as to `What is going to happen if?' or `What is going to happen when?'" she said. "We are discussing how to find a solution. I was giving examples where we have already found solutions, and that's why my assumption is we are going to find more solutions in this area as well."
Mrs Merkel indicated that Germany itself may seek changes to the systems of migrant welfare in response to an upcoming court judgment.
"We do not have a social union within the European Union. We have different situations, we have minimum wages that vary dramatically and we have social systems that vary dramatically," said the Chancellor.
"So the question of free movement needs to be connected with the question of employment and with the question as to how are we going to obtain a fair access to social benefits. This is the reason why this is considered by the European Court at the moment, and we are going to follow any judgment with a lot of attention.
"There may well be a situation where Germany has to say `Yes, we need to change something'."
Mrs Merkel said that Germany accepts the EU is a "two-speed" organisation in which different member states can opt in or out of various elements.
"The Europe of two speeds is effectively our reality today," she said. "As regards the two speeds, we ought to be open to anybody. We should not exclude anybody ... We already have the different speeds, and I have no problem at all with having these different speeds also in the future."
Mr Cameron agreed: "We already have a Europe of different speeds and sometimes slightly different destinations."
He added: "Europe needs to have the flexibility of a network, not the rigidity of a bloc. And I think it's started to find that flexibility, but I think we should encourage that flexibility not be frightened by it - see it as a strength of the Europe I want to build, rather than somehow see it as a weakness. It's a strength to be able to accommodate the different nation states with their different desires and different beliefs about what the right outcome is."
A senior Downing Street source said Mr Cameron would be speaking to all 27 EU leaders before the next European Council summit next month.
So far he has held discussions with counterparts from Latvia, Hungary, Sweden, Poland, France, the Netherlands, and Germany.
He has also spoken to Donald Tusk and Jean-Claude Juncker, presidents of the European Council and European Commission respectively.
There is a view in Number 10 that Mrs Merkel's opposition to treaty change had been overplayed previously and she is treating the issue pragmatically.
The agreement between France and Germany that treaty alterations are not required to deepen eurozone integration is regarded as separate to any action over Britain's renegotiation.
No decision has yet been taken on whether the UK will seek to make renegotiation a formal part of the agenda at next month's council, the source said.
Ukip leader Nigel Farage insisted the referendum was about who governs Britain rather than the details of benefits policy.
Responding to the Prime Minister's comments in Berlin, he added: "David Cameron is trying to make the UK's relationship with the European Union simply a question of migrant access to benefits.
"In reality, this is a marginal detail of a far bigger problem - both with mass inward migration putting pressure on wages and causing huge problems in the provision of public services and housing and also in the broader sense of our relationship with an out of date, sclerotic over-regulated bloc.
"The UK would be better off out of the European Union. Better able to trade freely and fairly with the wider world, better because it could set its own rules to suit its own circumstances, better because we would be able to elect and dismiss our government, rather than accept the governance of an unelected bureaucracy."