PARIS, June 14: Britain and France failed on Tuesday to resolve major differences over the European Union’s long-term budget, leaving the bloc facing financial deadlock as well as a political crisis over its constitution.

British Prime Minister Tony Blair said it was hard to see how the differences could be bridged after talks with French President Jacques Chirac, dimming hopes of an agreement on the 2007-2013 budget at an EU summit on Thursday and Friday.

“The meeting I’ve just had with President Chirac was immensely amicable but obviously there’s sharp disagreement,” Blair told a news conference after meeting Mr Chirac at the president’s Elysee Palace.

“I think it is difficult to see these differences being bridged, but of course you know we continue to talk,” he said.

France and other EU member states want Britain to compromise over its annual budget rebate from EU coffers.

Mr Blair has signalled he might compromise if France gives ground on the big EU farm subsidies it receives. Paris has rejected this.

Failure to reach a deal at the Brussels summit could leave the EU facing financial turmoil, adding to political problems since French and Dutch voters rejected the EU constitution — intended to help the enlarged bloc work smoothly.

A delay in securing a budget deal would put in jeopardy urgently needed public investment in the EU’s new member states which used to be in the communist bloc.

Mr Chirac did not speak to reporters after meeting Mr Blair but a spokesman said the president wanted a “reasonable and fair” deal in which each member state must assume its responsibilities.

Luxembourg Prime Minister Jean-Claude Juncker met Mr Blair in Luxembourg on Tuesday morning to try to broker a deal in time for the summit and before Britain takes over the EU’s presidency from Luxembourg on July 1.

Asked what would happen if no deal were reached by that time, Blair said: “I don’t think it will send us into crisis at all, provided we get the right answer eventually.”

He preferred a solid solution, even if it took time, to “a slapped-together compromise”, he said.

Under a formula agreed in 1984, when Britain was one of the bloc’s poorer members and received relatively little in farm subsidies and regional aid, London can expect a 5.1 billion euro ($6.18 billion) refund from this year’s 106.3 billion euro EU budget.

The EU’s executive Commission says that without changes, the British rebate will hit 8 billion euros a year by 2013.

Juncker proposed pegging the rebate at 4.6 billion euros a year in the 2007-2013 budget — the level reached before the EU expanded from 15 to 25 members in May last year.

Mr Blair rejected this.

“What the presidency are proposing is a freeze of the rebate,” Mr Blair’s spokesman said. “That is not acceptable to us.”

The spokesman said a freeze would cost Britain 25-30 billion euros over seven years and still leave it paying one-third more than France net into Brussels’ coffers.

London is isolated in clinging to its refund, nearly 10 percent of which is now paid by the poorer EU members from eastern Europe that joined last year.

Mr Blair signalled he might compromise if France gives ground on the substantial EU farm subsidies it receives. But Mr Chirac has refused, saying farm spending was settled in 2002.

One of Mr Blair’s closest political allies, EU Trade Commissioner Peter Mandelson, said on Monday it was wrong for the poor new member states from eastern Europe to have to contribute to a cash refund for wealthy Britain. It was not clear if this foreshadowed a British concession. —Reuters