LONDON (AFP) - German Chancellor Angela Merkel urged Britain on Thursday to stay in the EU but played down David Cameron's hopes that her visit to London would bring major reforms.
The British premier rolled out the red carpet in his bid to woo fellow conservative Merkel, who gave a speech to both houses of parliament and was due to have tea with the queen.
But Europe's most powerful politician was cool on Cameron's desire to change the EU's treaties ahead of a planned referendum on British membership of the bloc in 2017.
Addressing lawmakers in English after delivering much of the speech in German, Merkel said the EU should have as its common goal to be a "model for other regions of the world".
"In order to maintain this goal we need a strong United Kingdom with a strong voice inside the European Union," she said.
"If we have that we will be able to make the necessary changes for the benefit of us all."
Merkel was due to discuss EU reform and the crisis in Ukraine with Cameron during a lunch meeting at the prime minister's Downing Street residence.
During their 90-minute talks over lunch, Merkel and Cameron are also expected to address a proposed EU-US trade deal and the identity of the next European Commission chief following Jose Manuel Barroso's departure in 2015.
Cameron hopes to win over voters in Britain's in-out referendum by securing reforms that would dilute Europe's influence over domestic policy, but is finding support from fellow EU nations hard to come by.
Cameron has said the vote will be in late 2017, provided he is re-elected in 2015.
The chancellor said she was aware there were high expectations from her speech to members of the House of Commons and House of the Lords, the first by a German leader since president Richard von Weizsaecker's address in 1986.
But she said she was "caught between the devil and the deep blue sea" in terms of what she could offer.
"I have heard some expect my speech to pave the way for a fundamental reform of European architecture which will satisfy all kinds of alleged or actual British wishes. I am afraid they are in for a disappointment," she said.
But to those in Europe expecting her to say the bloc would not pay any price for British membership, she said "I am afraid these hopes will be dashed too".
Merkel follows in the footsteps of US President Barack Obama and French ex-president Nicolas Sarkozy in speaking to the twin chambers of parliament at Westminster.