David Cameron's hopes of getting a reform deal on Friday look in doubt as haggling continues at the EU summit. European leaders have reportedly been told to book hotels as talks on a final text, planned for breakfast, slipped back first to lunch, and now to dinner.
Several EU nations are digging their heels in over plans to curb migrant benefits and change EU regulations.
The British prime minster had planned to return to the UK to fire the starting gun on a EU referendum campaign on Friday.
He sounded cautiously optimistic on Friday morning, saying there had been 'some progress' in marathon all night talks, which broke up at 05:30. But stumbling blocks still remain after a day of one-to-one meetings and there is speculation talks will continue into Saturday.
The original aim had been to conclude the deal at an "'English breakfast' meeting on Friday, which became an 'English brunch', then an 'English lunch' and has now been delayed to dinner.
Cameron's plan had been to head back to London, with a deal in his pocket, for an emergency cabinet meeting at which he would commit the government to campaign for Britain to stay in a reformed EU. That would trigger the start of the referendum campaign and allow ministers who want Britain to leave the EU to speak out.
But Downing Street sources said it was increasingly unlikely a cabinet meeting would now be held on Friday. They said it was still possible a deal could be done but they "genuinely don't know" whether it will happen.
German Chancellor Angela Merkel was reported as saying it had become "clear that agreement will not be easy for many, but that the will is there".
Arriving at the summit venue on Friday morning, French President François Hollande made it clear that France continues to resist a deal on financial regulation aimed at protecting the City of London from new regulations imposed by the eurozone countries.
"Since last night, there are proposals that have been changed, notably on what concerns France - the wish to have a financial regulation system which is valid in all parts of Europe, and that there should be no right of veto or prevention."
The first EU Council session ended on Thursday with no agreement on several issues, and an EU source said that while it had been 'intense and constructive' with all the countries confirming their wish for the UK to stay in the bloc, some also set out specific concerns.
"We expected this," the EU source said: "But honestly we had hoped for some of them to be less critical."
An EU source spoke of five key areas where agreement had not been reached:
- How the EU's binding treaties will be altered to make the changes
- How many member states can trigger an "emergency brake" on migrant welfare
- For how long a member state can impose restrictions on in-work benefits for migrants
- Whether child benefit curbs can be applied retrospectively
- Changing treaties to alter the principle of "ever-closer" union
It is understood Cameron continues to face resistance to his plans to curb in-work benefits for EU migrants.
But he is thought to have rejected calls from the Central European nations, represented in the overnight talks by Czech prime minister Bohuslav Sobotka, for cuts in child benefit for offspring living overseas to be imposed only on new migrants.
Belgium - backed by France - proposed that the summit conclusions should state that any deal agreed this week is final and the EU will not come back with an improved offer if Britain votes to leave.
The move is designed to kill off the idea, backed by some Eurosceptics that a Leave vote would give the UK leverage to extract further concessions from the EU before a second poll.
UKIP leader Nigel Farage said he expected Mr Cameron to come back with a deal from Brussels, as the other leaders would recognise how "embarrassing" it would be for him to return empty-handed.
But he added: "He hasn't asked for us to get back supremacy for our Parliament, he hasn't asked for us to control our own borders, he hasn't asked to reduce the vast daily fees we pay.
"We will be allowed - after he has come here like Oliver Twist and begged for concessions - to control migrant benefits for up to four years. I find the whole thing as a British person pretty shameful."
Labour leader Jeremy Corbyn said his party would be campaigning for Britain to remain in the EU - but he branded David Cameron's renegotiations "a theatrical sideshow, designed to appease his opponents within the Conservative Party".
Brexit tensions are a test for Europe, says French minister
French European Affairs Junior Minister Clement Beaune (pictured) said on Monday (14 June) that current tensions over Brexit between British Prime Minister Boris Johnson's government and the European Union were "a test" for Europe, Reuters.
The tensions between Britain and the EU threatened to overshadow the Group of Seven summit's conclusion on Sunday, with London accusing France of "offensive" remarks that Northern Ireland was not part of the United Kingdom. Read more.
"Mr Johnson thinks that you can sign deals with the Europeans and not respect them and that Europe will not react. It is a test for Europe," Beaune told Europe 1 radio.
"I am telling the British people, (Brexit) commitments must be respected... If it is not the case, retaliatory measures could be taken," Beaune added.
During talks with Emmanuel Macron at the G7 summit, Johnson queried how the French president would react if Toulouse sausages could not be sold in Paris markets, echoing London's accusation that the EU is preventing sales of British chilled meats in Northern Ireland.
"In Northern Ireland there are sausage import problems... Why? Because when you leave the European Union, you have necessarily some (trade) barriers," Beaune said.
"I cannot tell the French or the Europeans that Britain can export via (EU member) Ireland some products such as meat without any control... That is what it is all about. Brexit has consequences."
Ex-EU Brexit negotiator Barnier: UK reputation at stake in Brexit row
Michel Barnier, the European Union's former Brexit negotiator, said on Monday (14 June) that the reputation of the United Kingdom was at stake regarding tensions over Brexit.
EU politicians have accused British Prime Minister Boris Johnson of not respecting engagements made regarding Brexit. Growing tensions between Britain and the EU threatened to overshadow the Group of Seven summit on Sunday, with London accusing France of "offensive" remarks that Northern Ireland was not part of the UK. Read more
"The United Kingdom needs to pay attention to its reputation," Barnier told France Info radio. "I want Mr Johnson to respect his signature," he added.
Germany’s Merkel urges pragmatic approach to Northern Ireland
German Chancellor Angela Merkel (pictured) called on Saturday for a “pragmatic solution” to disagreements over part of the Brexit deal that covers border issues with Northern Ireland, Reuters Read more.
Prime Minister Boris Johnson said Britain will do "whatever it takes" to protect its territorial integrity in a trade dispute with the European Union, threatening emergency measures if no solution was found.
The EU has to defend its common market, Merkel said, but on technical questions there could be a way forward in the dispute, she told a news conference during a Group of Seven leaders' summit.
"I have said that I favour a pragmatic solution for contractual agreements, because a cordial relationship is of utmost significance for Britain and the European Union," she said.
Referring to a conversation she had with U.S. President Joe Biden about geopolitical issues, Merkel said they agreed that Ukraine must continue to remain a transit country for Russian natural gas once Moscow completes the controversial Nord Stream 2 gas pipeline under the Baltic Sea.
The $11 billion pipeline will carry gas to Germany directly, something Washington fears could undermine Ukraine and increase Russia's influence over Europe.
Biden and Merkel are due to meet in Washington on July 15, and the strain on bilateral ties caused by the project will be on the agenda.
The G7 sought on Saturday to counter China's growing influence by offering developing nations an infrastructure plan that would rival President Xi Jinping's multi-trillion-dollar Belt and Road initiative. L5N2NU045
Asked about the plan, Merkel said the G7 was not yet ready to specify how much financing could be made available.
“Our financing instruments often are not as quickly available as developing countries need them,” she said
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