THE process of ­renegotiating the UK's ­relationship with Brussels has not yet started, but this week's visit of German chancellor Angela Merkel will form part of the effort to reform the European Union, William Hague has said.

The Foreign Secretary said Germany was the "most important partner" on EU reform because of its economic strength and key role in the eurozone.

Mrs Merkel will address both Houses of Parliament on Thursday and David Cameron is expected to raise the issue of overhauling the EU's immigration rules.

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Mr Hague said: "She knows, and I believe she understands, what our Prime Minister David Cameron has been putting forward, that this is the age of flexibility, accountability and competitiveness.

"So we will be discussing the ideas that we have in common and, as you know, it's our intention after the next general election to improve Britain's relationship with the European Union, to renegotiate the relationship between Britain and the EU."

European trade commissioner Karel de Gucht said it would be a "big mistake" for the UK to leave the EU.

Regarding the prospect of a major EU-US trade deal, he said: "This kind of trade deal, I am pretty sure about it, you can only negotiate them between big blocs."