The Prime Minister of Luxembourg, which currently holds the EU presidency, has said he doubts he will be able to secure agreement on the EU's long-term budget at a summit due to start tomorrow.
Jean-Claude Juncker was speaking hours before he was due to circulate a compromise proposal to EU leaders on the budget for the six years from 2007.
Mr Juncker said differences over Britain's budget rebate of €4.5 billion a year was one of the main issues making an agreement unlikely.
Luxembourg said all of Britain's EU partners want a change in the rebate.
The British Prime Minister, Tony Blair, has said his government wants a cut in farm support, which mainly benefits France, if it is to accept a review of the rebate.
Leaders from the 25 member states are holding a European Council meeting in Brussels tomorrow and Friday.