LONDON -- It's been described as the largest current civil engineering project, a multibillion-dollar link that will help revolutionize Europe's economy and physically end Britain's historic isolation, a dream born in Napoleon's day.

The tunnel under the English Channel between Britain and France is half-dug and scheduled to open on time in three years. But the three-tunnel thoroughfare, called the "chunnel," is almost 60 percent over budget, embroiled in a contractor dispute and scrambling for more investment money.

The project also has raised increasing hostility among many Britons, who fear the tunnel will provide an easy conduit for ills from the continent ranging from terrorism to rabid animals.

"We will have the money to finish the project," said Alastair Morton, British deputy chairman of Eurotunnel, the privately owned Anglo-French company overseeing the work.

The Chunnel's June 15, 1993, scheduled opening will come six months after the 12-nation European Community formally drops remaining trade barriers and becomes a unified marketplace of 320 million consumers. But the project's success hinges on much more than just finishing the undug part.

While the French are forging ahead with a high-speed rail link to their end of the tunnel, for example, state-owned British Rail is dragging.

"Britain becomes branch line of Europe," a Guardian newspaper headline declared after the government announced June 14 that it would not fund a high-speed rail link between London and the British end of the tunnel.

It's not the first time the idea of a tunnel has irritated Britain's island identity. The British resisted an undersea bond with the continent envisioned nearly 200 years ago by a French engineer named Albert Mathieu. Napoleon wanted to build it but Britain warned him off. Tunneling actually was started in subsequent efforts in 1882 and 1974 but they were scrapped.

The British public demonstrates little enthusiasm for the Chunnel. Random samplings elicit fears that it will import rabies, terrorists and invading armies.

"There is an attitude in France that this is a great project in the national interest. In this country, the attitude to these projects tends to be the reverse," Morton told a recent news conference.

Giant boring machines are digging three tunnels toward each other from Folkestone, England and Calais, France, with the first underground meeting expected in November in the service tunnel between the rail tunnels.

Tunneling is three months ahead of schedule on the French side, a week behind on the British. As of mid-June, workers had dug 53.2 miles of the total 91.9 miles.

Chunnel trains will carry passengers, cars and freight between London and Paris in about three hours, roughly the same time as a flight including ground travel, and at least twice as fast as a car-ferry journey.

Eurotunnel estimates that 28 million passengers and 17 percent of Britain's non-oil trade will pass through the tunnel in the first year. The Civil Aviation Authority says the tunnel should divert 5 million of 53 million air passengers annually.

Shareholders recently approved a sale of an extra $906 million worth of stock to existing shareholders, who already have bought $1.7 billion. That step could clear the way for a bank syndicate's approval of additional credit Eurotunnel has requested, from $8.6 billion to $12 billion.

Assuming banks approve, the project would have a total of about $14.6 billion in debt and equity financing. The company most recently estimated it would cost $13.1 billion to complete, vs. $8.3 billion forecast initially.

Eurotunnel says it doesn't expect to profit before the end of the century, and probably won't pay shareholders a dividend until 1999, four years later than envisioned.

But stockholders haven't fared badly: The shares, first traded in November 1987 at about $6, have traded recently at $8.55. The more urgent worries for Eurotunnel have been costs, creditors and contractor feuds.

In October, concern about the rising price tag drove Eurotunnel's banking syndicate to freeze funds for three months until the company reached a truce with Trans-Manche Link, the consortium of 10 British and French contractors doing the construction, over responsibility for $1.7 billion in overruns.

The problems led to Eurotunnel's second management shake-up since 1987.

The British government's refusal to finance a rail link has presented another big obstacle.

Eurotunnel says it can survive without a new link. But clearly it stands to lose business if travelers have to dawdle through the tangled commuter network of southern England to reach the tunnel.

Jimmy Knapp, general secretary of the National Union of Railwaymen, said, "The decision is an unmitigated disaster for British industry and for the British people as we approach the 1992 single-market economy."

British Rail says it will go on studying options, but a new line is not expected this century.

British industrialists say they are worried that poor rail links will lose them export markets. But Prime Minister Margaret Thatcher, for whom market forces are a cornerstone of policy, is adamant that she won't spend taxpayers' money on a rail link.

The French government, on the contrary, is spending $2.8 billion building 210 miles of rail from Paris to the tunnel, with a branch to Brussels, where the EC is headquartered. Trains capable of 190 mph will link the tunnel's freight and passengers to another planned high-speed system.