German Chancellor Angela Merkel cautioned Britain on Thursday that she could not promise a fundamental reform of Europe that would satisfy all Britain's wishes.

Speaking in English to lawmakers from both houses of the British parliament in the Palace of Westminster's Royal Gallery, Merkel said she understood there were high expectations of her speech.

"Some expect my speech to pave the way for a fundamental reform of the European architecture which will satisfy all kinds of alleged or actual British wishes. I am afraid they are in for a disappointment," Merkel said.

"Others are expecting the exact opposite and they are hoping that I will deliver the clear and simple message here in London that the rest of Europe is not prepared to pay almost any price to keep Britain in the European Union. I am afraid these hopes will be dashed," she added.

READ MORE: Merkel says she cannot satisfy all Britain's EU wishes