EU holding last-ditch talks on UK budget row

A Franco-British battle over the European Union's budget is threatening to wreck an EU summit this week.

A Franco-British battle over the European Union's budget is threatening to wreck an EU summit this week.

Paris is demanding an end to Britain's cherished rebate from Brussels coffers, but London has counter-attacked over EU subsidies to French farmers.

Most of the bloc's 25 foreign ministers at a final round of budget talks in Luxembourg before the summit backed the French line that the 2002 farm pact could not be reopened, and that Britain's €5.3 billion refund be reduced or scrapped.

Failure to break the deadlock between the two capitals could block an overall accord on the bloc's long-term budget for 2007-2013, worth €106.3 billion this year.

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Instead of rescuing Europe's future, the June 16th-17th summit in Brussels could go down in history as marking the resumption of decades of fighting over farm spending - by far the EU's costliest policy.

In a flurry of pre-summit diplomacy, British Prime Minister Tony Blair will meet German Chancellor Gerhard Schroeder in Berlin today before a showdown in Paris tomorrow with French President Jacques Chirac.

Luxembourg, which holds the EU presidency, is seeking a compromise between the bloc's executive commission, which wants member states to dig deeper into their pockets to fund the costs of enlargement, and a group of six major net payers - including Britain - which are demanding big cuts in planned expenditure.