Angela Merkel says Germany and the UK share the goal of a “strong and competitive” European Union.

In an historic address to the British parliament, the leader of the EU’s most powerful state hailed the “close relationship between the two countries.”

Merkel’s support is key for British Prime Minister David Cameron as he attempts to push for concessions from Europe ahead of a proposed referendum on the UK’s membership.

Merkel said, “Europe without borders is one of the big achievements of European unification. All member states and all citizens benefit from this. But in order to keep these freedoms and to retain the support of citizens for this, we need to have the courage to identify wrong developments – and change them.

“That only works when we improve the European Union. As German chancellor, I see the United Kingdom as an important ally in this,” she continued, to enthusiastic applause from her audience.

Merkel stopped short, however, of putting Germany’s support behind major reform, saying changing Europe must always be a “step-by-step” process.