Cameron and Merkel 'agree to work together' on EU

David Cameron and Angela Merkel David Cameron is staying with Angela Merkel in Meseberg

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David Cameron and German Chancellor Angela Merkel agree on the "urgent need" to make Europe more "competitive and flexible", Downing Street has said.

After a meeting outside Berlin, No 10 said both agreed they wanted "faster progress" on trade deals between the EU and the rest of the world.

They also discussed how G8 countries could take "concrete action" on tax evasion and aggressive tax avoidance.

The prime minister and Mrs Merkel also discussed Syria, Afghanistan and Iran.

Mr Cameron arrived in Berlin with his family on Friday and is staying at the chancellor's official guest residence Schloss Meseberg, in the Brandenburg countryside.

'Global leadership'

Following talks, No 10 said the two leaders also agreed that the EU should be prepared to make an "ambitious offer" in trade talks with the US.

Mr Cameron believes the EU needs to change to allow the UK, along with other members, not to be bound by all of its decisions.

In his keynote speech on the UK's future in Europe earlier this year, Mr Cameron pledged to hold an in-out referendum during the early part of the next parliament - by the end of 2017 at the latest - if the Conservatives win the next general election.

He has argued a new settlement is needed before UK voters are asked if they want to end ties with Brussels.

"On the EU, the PM set out his approach to European reform, following on from his speech in January," the Downing Street statement said of this weekend's meeting.

It said both leaders "agreed on the urgent need to make Europe more competitive and flexible and talked about ways to achieve this. And they discussed how we can work together in the run-up to the May and June European councils to make further progress."

Mr Cameron and Mrs Merkel also discussed the forthcoming G8 summit, which the prime minister is hosting at Lough Erne in Northern Ireland, and the need to show "global leadership" in tackling tax evasion and aggressive tax avoidance.

BBC Berlin correspondent Stephen Evans said people around Mrs Merkel confirmed she had questions for the prime minister about British sovereign territories which are tax havens.

He added that tax avoidance plays "very strong" in Germany, a country keen on stopping people putting their money in bank accounts abroad and avoiding paying tax.

On Syria, where Mrs Merkel is resisting pressure from the UK and France to lift an EU arms embargo to allow equipment to go to the rebels, they agreed to keep working to find ways to increase pressure on the Assad regime while strengthening the "moderate" opposition.

Downing Street said both leaders share grave concerns about the deteriorating situation and the ongoing bloodshed.

Labour has previously said Mr Cameron's trip to Germany showed the prime minister was "marooned" between the demands of Tory backbenchers and what European leaders would accept.

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