Tony Blair and Jacques Chirac in Brussels. (Reuters)

Brussels, June 17 (Reuters): Prospects of a deal on the EU’s long-term budget faded today as France dug its heels in on farm subsidies and Britain clung to its widely criticised rebate from EU coffers.

The budget clash came after leaders decided yesterday to allow more time to ratify the new EU constitution, rejected by French and Dutch voters and declared dead by its critics. That decision prompted Denmark, Portugal and Ireland to say they would postpone referendums due later this year.

The twin problems of the 2007-2013 budget and the wounded constitution have threatened to push the 25-nation bloc into paralysis, unsettling financial markets.

At the heart of the budget row is a long-standing dispute between France, which benefits most from EU farm subsidies, and Britain, which won a rebate in 1984 to compensate for receiving less than others because far fewer Britons worked on the land.

French President Jacques Chirac ? a long-time champion of farmers ? made it clear from the outset today that he would not accept Britain’s offer to consider a rebate cut on condition there was an overhaul of the EU’s agricultural policy.

“The future of the British cheque after 2013 should, under no circumstances, be linked to a reform of farm expenditure,” he said, according to speaking notes made available to reporters.

His foreign minister, Philippe Douste-Blazy, said a proposal to freeze the British rebate during the 2007-2013 budget period at its pre-enlargement level was not acceptable. “A freeze is not enough,” he said.

British Prime Minister Tony Blair’s spokesman hammered home London’s unbending line after Blair held talks with EU president Jean-Claude Juncker: “So long as the budget remains distorted, the case for the rebate remains,” he said.

Britain has threatened to use its veto to defend the annual cashback from Brussels, won by former Prime Minister Margaret Thatcher and worth 5.1 billion euros ($6.18 billion) out of a 106.3 billion euro EU budget this year.