Britain and EU push for crucial 'Brexit' deal

(BRUSSELS) - British and EU diplomats raced against time Monday to seal a deal on changes to Britain's membership of the bloc by the end of the day and allow Prime Minister David Cameron to hold a referendum as planned this summer.

Cameron and European Union President Donald Tusk failed to reach an agreement in London on Sunday night, but set a 24-hour deadline for further negotiations in Brussels to produce a draft agreement.

Without a draft there will be no time for European capitals to sign off on a full deal at an EU summit later this month, in turn ruling out Cameron's preferred date of June for a referendum on Britain's EU membership.

The European Commission said on Monday there had been "progress", especially on proposals for a so-called "welfare brake" that would allow London to immediately stop benefits payments to EU migrants in Britain.

"However we are not there yet. Nothing is agreed until everything is agreed," Margaritis Schinas, a spokesman for the EU's executive body, told a daily briefing.

The turmoil over Britain's membership comes as Europe is struggling with its biggest refugee crisis since World War II, and the ongoing fallout over the eurozone debt crisis.

- 'Crucial' talks -

Tusk said on Twitter on Sunday that "intensive work" in the next 24 hours was "crucial", and he is set to decide on Monday night whether or not to go ahead with plans to submit a proposal for a British deal.

Although Cameron 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 this summer and before British eurosceptics, particularly in his own Conservative party, become even more unruly.

The British premier has set out four policy areas in which he wants EU reforms, but a EU source told AFP of the talks so far: "Only one basket is really 'closed'."

Downing Street insisted there had been a "significant breakthrough" on Sunday on plans for an "emergency brake" excluding EU migrants from benefits such as income top-ups for low-paid workers until they have paid into the British system.

It said the European Commission had agreed the brake could be applied immediately under a rule that would require countries to show their welfare system was under strain.

Other countries had objected strongly to Cameron's original demand for a flat-out four-year ban on EU workers claiming benefits, saying it was discriminatory and could require change to the EU's founding treaties, a very difficult procedure.

- French 'red line' -

But underlining the challenges ahead, Paris set a red line by warning 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.

The other areas -- ensuring greater economic competitiveness in the EU and giving Britain guarantees against further European integration -- are seen as easier to agree on.

Cameron, who was re-elected in May, insists he is willing to hold out for as long as it takes to secure the right package of reforms, if necessary delaying the referendum until September or even next year.

The number of European job seekers has become a hot political issue in Britain and key driver of anti-EU sentiment -- a phenomenon increasingly seen across the bloc.

The UK Independence Party led by Nigel Farage, which wants Britain to leave the EU, dismissed Cameron's demands as "tinkering".

"The theatrics and drama of David Cameron's sham renegotiation continues and he is playing us for fools," senior official Paul Nuttall said.

Opinion polls are largely split on whether Britons would vote to leave the EU in a so-called "Brexit".