Brexit talks resume after failure to reach agreement overnight

Talks resumed in Brussels on Friday morning as EU leaders met following overnight discussions to secure a reform deal which would allow David Cameron to call a referendum on the UK's membership.

The British prime minister warned EU leaders on Thursday that he was ready to walk away from their summit in Brussels without a deal unless they gave ground on key British demands and provided him with a “credible” package he can sell to voters.

Taoiseach Enda Kenny said he would “strongly defend the rights of Irish workers in Britain” if the referendum goes ahead in June.

"The British government and the British prime minister fully understand the nature of the relationship we have," Mr Kenny told RTÉ radio. "We're both outside Schengen, we both have a common travel arrangement area."

He added that Irish workers in Britain, including the 50,000 Irish people on the boards of British companies, would be entitled to vote in the referendum.

Mr Kenny admitted the Government had no plan in place should the UK vote to leave the European Union next June.

“We’ve not prepared a plan to deal with that particular issue because my preference is that we do everything humanly possible and politically possible to keep Britain as a foremost member of the union,” he said.

Mr Kenny said on Friday it may take longer than expected to get a deal at a European Union summit on new membership terms for Britain.

He told reporters after a first day of negotiations that EU leaders were serious about achieving a conclusion and did not want to let the talks drift.

“It might take longer than they think,” he said on leaving the summit centre, where Mr Cameron was locked in overnight talks with top EU officials on key sticking points in the negotiations.

Former taoiseach John Bruton, said on Friday he believed there was the will amongst European Union leaders meeting in Brussels to find a solution on Britain’s future relationship with the EU.

Mr Bruton, who has been vocal in his support for Britain remaining in the EU, told Newstalk that British proposals on limiting welfare benefits for migrant workers from other EU countries could be problematic and have an impact on Irish workers in the EU.

High stakes

An agreement that would allow Mr Cameron to return to London and launch a campaign to stay in the EU at a June referendum still seemed feasible by the end of a two-day summit on Friday, but European countries were putting up a hard fight.

The stakes are high. Mr Cameron says unless he gets the changes he seeks, he will not campaign to remain in the 28-member bloc. British voters are divided but polls show they narrowly favour staying in.

Officials and diplomats were seeking to rework a draft deal before Mr Cameron and other key EU leaders resurfaced for more bilateral talks late on Friday morning.

Aides had previously said a proposed deal could served to the leaders over “English breakfast“ on Friday. But after the night-long debates, officials spoke instead of “English lunch“.

As British officials described the talks as "tough going", the deepest divisions surrounded a proposal to index the payment of child benefits for children living abroad, paying them at the rate applicable in their home country. Britain initially sought to limit such payments for all relevant children with immediate effect. The countries of central and eastern Europe, however, insisted that only the children of newly arrived migrants should be affected.

Possible compromise

A possible compromise could see payments indexed immediate for children of new migrants living abroad but phased in for those of migrants already living in the country.

The issue of excluding Irish workers in Britain from any restrictions to benefit payments will not be discussed at the summit and Government sources said there was never any intention to do so.

Britain is sympathetic to the Government’s argument that the unusual position of Irish people in Britain means they could be treated differently from other EU citizens.

Neither British nor Irish officials expect any such arrangement to be negotiated, however, until the details of Britain’s deal are fully worked out.

Senior diplomatic sources suggested that Britain and Ireland may require EU approval for any special arrangement, just as they did for the common travel area when both countries first joined the Common Market.

‘Ever closer union’

No country has ever voted to leave the European Union. Britain is the EU’s second largest economy and one of its two permanent members on the UN Security Council. Its exit would end the vision of the EU as the natural home for European democracies and reverse the continent’s post-second world war march toward “ever closer union”.

Britain has always had an ambiguous relationship with the bloc, staying out of two of its most ambitious projects, the Schengen border free zone and the euro common currency.

The issue has historically divided Mr Cameron’s Conservative Party, crippling his predecessor John Major and bringing down his hero Margaret Thatcher. Some Conservatives have criticised the reforms he is negotiating in Brussels, although most senior party figures are likely to follow his lead in campaigning to stay in if he wins the concessions he is seeking.

Politicians present at the summit centre in Brussels predicted an agreement eventually.

"I simply cannot believe that at some point today Cameron will not get some kind of concession because they know that if Cameron is sent home totally humiliated, Brexit will have got a bit closer," said Nigel Farage of Britain's anti-EU UKIP party.

French, Belgian, Czech resistance

French president Francois Hollande and the Belgian and Czech premiers showed the strongest resistance to various points of a draft agreement brokered by summit chairman Donald Tusk.

Paris has pushed for amendments to ensure Britain cannot veto actions by the euro zone countries or give City of London banks competitive advantage through regulation.

A group of east European states chaired by the Czechs is trying to hold back how far their citizens can be denied welfare benefits in Britain or have family allowances reduced.

Belgian prime minister Charles Michel is fighting a rearguard action for the federalist cause to limit damage done to European plans for “ever closer union” by giving Britain a guarantee it need never share more sovereignty.

Italian Prime Minister Matteo Renzi said there had been some backward steps: “I‘m always confident but a bit less optimistic than when I arrived,“ he said.

Mr Cameron told leaders on Thursday evening: “If we can reach agreement here that is strong enough to persuade the British people to support the UK’s membership of the EU then we have an opportunity to settle this issue for a generation.”

Additional reporting from agencies