Merkel warns Britain against European Union exit
By Peter Griffiths and Claire Davenport
LONDON (Reuters) - Germany's Angela Merkel on Wednesday warned Britain not to turn its back on Europe and urged its Prime Minister David Cameron to work with her to avoid deadlock at European Union budget talks later this month.
The leaders met in London to try to iron out differences over the EU's 1 trillion euro ($1.28 trillion) budget that threaten to block a deal and fuel fears that London is drifting away from the 27-nation union.
Describing plans to increase the EU budget as "ludicrous", Cameron has threatened to veto any deal he thinks is not in Britain's interests and will push for a real-terms freeze.
However, German officials are exasperated by what they see as London's slide towards Europe's margins, a feeling reinforced last week after the British parliament voted to call for a real-terms cut in the EU's budget.
Before meeting Cameron, the German Chancellor told the European Parliament she could not imagine a Europe without Britain, the world's sixth largest economy, which relies on the EU for half its trade.
"I believe you can be very happy on an island, but being alone in this world doesn't make you any happier," Merkel said after British politician Nigel Farage, leader of the anti-European UK Independence Party, urged her to tell Cameron that Britain should quit the EU.
Cameron, who wants to stay in the bloc under renegotiated terms, argues that the EU must tighten its belt at a time when the euro zone debt crisis looms large, and many countries are faced with austerity and shrinking household budgets. Continued...