Auf wiedersehen, Britain: 'Merkel ready to cast UK adrift' over quotas on migrant workers Ms Merkel is understood to have told the Prime Minister he is approaching a "point of no return" where his demands for changes in Britain's relationship with the EU are not acceptable to Germany. Her comments come ahead of a key speech, currently being worked on in Downing Street, in which Mr Cameron will spell out his plans for EU Labour market reform as part of his proposed renegotiation of Britain's membership. Last month Downing Street sources suggested that the Prime Minister was looking at a system to control EU migration by capping the national insurance numbers issued to foreign workers. But the out-going President of the European Commission suggested that such a proposal would be incompatible with the principle of freedom of movement which was an "essential" part of the union. This is a sentiment shared by Ms Merkel. Video: George Osborne comments on UK's EU levy Der Spiegel cited sources in Berlin saying that if Mr Cameron insisted on limiting the number of immigrants from other EU states, "there will be no going back." It quoted the sources as saying: "Should Cameron persist [in this plan], Chancellor Angela Merkel would abandon her efforts to keep Britain in the EU. With that a point of no return would be reached. That would be it then. Speaking after a meeting of the European Council last month, Ms Merkel said Germany would not interfere with the basic principle of freedom of movement, but emphasised: "That doesn't mean that there aren't various problems." Ms Merkel added that she had discussed these problems with Mr Cameron, including benefits for unemployed EU migrants. She added: "However, it is my view that this must be resolved in a way that on the one hand allows us to tackle abuses, but on the other, does not deviate from the basic principle of freedom of movement in Europe." Yesterday there were signs that the German warning may have been heeded by Mr Cameron. The Sunday Times reported that the Prime Minister was looking at ways to stretch existing EU rules "to their limits" rather than insist on measures that would require a treaty change. This could include deporting foreign nationals after three months if they had not found a job and were unable to support themselves. "The focus is on drawing up a German-compliant package of measures," one minister said. Cameron needs to square Merkel or we won't get anything. We've got to stretch the existing rules to their limits. There is no right in the EU to stay somewhere if you can't support yourself after three months. That will be part of the package, I have no doubt. Mr Cameron has said he will hold an in-or-out referendum on EU membership in 2017 if he wins the May general election. He has said he wants Britain to remain inside a reformed EU but it is far from clear that the reforms he wants will be accepted by other members.