Merkel Fears U.K. EU Exit on Free Movement, Spiegel Says

German Chancellor Angela Merkel has expressed concerns for the first time that Britain might quit the European Union amid Prime Minister David Cameron’s bid to curb free movement within the bloc, Der Spiegel magazine reported.

Merkel is concerned by Cameron’s efforts to reduce the free flow of workers from the other 27 EU member states into Britain, Spiegel said today, citing unnamed officials in Merkel’s office and Germany’s Foreign Ministry. Cameron is seeking to woo back voters from the anti-EU, anti-immigration U.K. Independence Party in the run-up to the May 2015 general election.

The German chancellor told Cameron in a private conversation at an EU summit in Brussels last month that the premier would reach a point of no return if he continued with his efforts to introduce quotas on migration to the U.K. by fellow EU citizens, Spiegel said. At that point, she’d halt her attempts to keep Britain in the bloc.

Cameron, who’s pledged to renegotiate and hold a referendum on EU membership if re-elected next year, is drawing up proposals to curb immigration. The Sunday Times newspaper reported today, citing unnamed senior ministers, that instead of plans to set quotas for letting in low-skilled workers, Cameron is now working on ideas more acceptable to Merkel, such as not allowing EU citizens without a job to stay for longer than three months if they can’t support themselves.

“Free movement of labor shouldn’t be abused,” former Chancellor of the Exchequer Kenneth Clarke, one of the most pro-EU Tory lawmakers, told BBC Television’s “Sunday Politics” program.

Stretching Rules

Cameron would seek to stretch existing EU rules to their limits and will aim to come to an agreement with Merkel on his plans before he makes them public, the Sunday Times said.

Merkel told a news conference after the EU summit that “Germany will not tamper with the fundamental principle of free movement in the EU,” though benefit abuse “needs to be resolved.” Merkel’s office said today it had nothing to add to that statement when asked about the Spiegel report.

The chancellor is less worried by Cameron’s anger over a 2.1 billion-euro ($2.7 billion) EU budget surcharge announced during the summit, Spiegel said. The premier has repeated he’ll refuse to pay the sum in full by the due date of Dec. 1 and has said the demand raises the chances of Britain quitting the bloc.

With polls showing immigration as U.K. voters’ greatest concern, ministers from Cameron’s Conservative Party intensified their rhetoric on the issue last week. Defence Secretary Michael Fallon talked of “whole towns and communities being swamped by huge numbers of migrant workers.”

UKIP Defectors

Two of Cameron’s lawmakers in the House of Commons have defected from the Tories to UKIP in the past three months. One, Douglas Carswell, won re-election on a UKIP ticket in his Clacton district. The second, Mark Reckless, has the backing of nearly half the electorate in his Rochester constituency, where he’s bidding to emulate Carswell in a Nov. 20 special election, according to a poll last week.

A YouGov Plc survey published today showed the Tories trailing the opposition Labour Party by 31 percent to 32 percent in the national share of the vote, with UKIP in third place at 18 percent. YouGov questioned 1,808 voters Oct. 30-31. It didn’t specify a margin of error.

Before it's here, it's on the Bloomberg Terminal.