Britain, EU Hold Crucial Talks on 'Brexit' Deal

British Prime Minister David Cameron and EU President Donald Tusk failed to reach an agreement over dinner in London Sunday and so decided on a 24-hour extension for further discussion in a bid to reach an accord by the self-imposed deadline.

But with only one of the four policy areas or baskets demanded by Cameron having been agreed so far, according to EU officials, the negotiations to keep Britain in the 28-nation bloc promise to be difficult.

The turmoil over Britain's membership comes as the EU is struggling with the biggest influx of migrants since World War II, and the ongoing fallout over the eurozone debt crisis.

"Intensive work in next 24 (hours) crucial," Tusk wrote on Twitter Sunday night.

"Only one basket is really 'closed'," an EU source told AFP. "Negotiations continue."

Failure to reach an agreement Monday will mean that Tusk is likely unable to issue a draft proposal for other EU leaders this week, in time for a full deal at an EU summit Brussels on Feb. 18-19.

Cameron, whose Conservative party has long been split by the issue of Europe, had hoped for a deal at the summit to give him time to call a referendum on Britain's membership of the EU this June, the first since 1975.

Although he has set a deadline of the end of 2017 to hold a referendum, he is keen to push a vote through before any new flare up in the migration crisis and before British eurosceptics, particularly in his own party, become even more unruly.

His main goal is to exclude EU migrants from benefits such as income top-ups for low-paid workers until they have paid into the British system, under a so-called "emergency brake" system.

Downing Street insisted there had been a "significant breakthrough" Sunday, with the European Commission having agreed the brake could be applied immediately under a rule that would require countries to show their welfare system was under strain.

According to government sources, Cameron is prepared to accept the "emergency brake" in place of a previously proposed four-year curb on EU migrants claiming benefits. 

Other countries had objected strongly that this was discriminatory and could require change to the EU's founding treaties, a very difficult procedure.

"The prime minister intends to leave Tusk in no doubt that he will not do a deal at any price," a senior British government source said.

But underlining the challenges ahead, Paris warned London that it would block a separate proposal to protect EU countries like Britain that are not part of the euro single currency.

"To French officials, any provisions giving non-euro countries power to indefinitely stall eurozone votes are unacceptable," the Financial Times reported, saying France would reject any "backdoor veto" for the City of London finance hub.