UK Prime Minister Tony Blair has said there was 'sharp disagreement' in his talks in Paris today with French President Jacques Chirac.
Mr Blair said the meeting was nevertheless 'immensely amicable'.
The difficulty principally concerns the future financing of the EU.
A wide gulf remains between French demands for a review of the rebate on UK budget contributions, and Britain's demand for wider reform focusing on subsidies to French farmers.
The British premier said it was difficult to see these differences being bridged but, he went on, 'of course we continue to talk to people including the presidency about it.'
Mr Blair said that on the troubled European constitution, he detected a shifting mood in Europe.
He was, he said, now more clear than ever before that it was right to have some pause for reflection before proceeding.
Mr Blair earlier turned down a proposal to freeze London's rebate between 2007 and 2013.
The move would have cost the British Exchequer between €25 and €30 billion.
The proposal was made by the Prime Minister of current EU presidency holders Luxembourg, Jean-Claude Juncker, in a meeting with Mr Blair.
An EU summit will be held later this week.
