The European Union and Britain must be prepared to make compromises, German Chancellor Angela Merkel said on Wednesday, Jan 23, after British Prime Minister David Cameron demanded a radical reform of the EU and a referendum on UK membership.

"Germany, and I personally, want Britain to be an important part and an active member of the European Union," Merkel told reporters.

"We are prepared to talk about British wishes but we must always bear in mind that other countries have different wishes and we must find a fair compromise. We will talk intensively with Britain about its individual ideas but that has some time over the months ahead," Merkel said, according to Reuters.