NORTHERN Ireland may be given a special Brexit deal to remain in the European single market and customs union it emerged yesterday as the EU published its position paper on Ireland, Northern Ireland and the Irish border.

The prospect of a bespoke settlement was raised after the document signalled it would seek a “unique” arrangement to protect both the peace process and wider interests of the island of Ireland. The Irish Republic is one of the EU 27.

Fears have been raised that a return to border checks could undermine the Good Friday peace agreement and damage the economy.

Michel Barnier, the EU’s chief negotiator, dismissed the UK’s position which calls for an “unprecedented solution”, avoiding physical checks at the border.

The UK Government is arguing for a wide-ranging exemption under which small and medium-sized businesses would not have to comply with any new customs tariffs.

Barnier ruled out the Irish issue being used as a template for any other EU-UK border.

“What I see in the UK’s paper on Ireland and Northern Ireland worries me,” he said.

“The UK wants the EU to suspend the application of its laws, its customs union, and its single market at what will be a new external border of the EU.

“And the UK wants to use Ireland as a kind of test case for the future EU-UK customs relations. This will not happen.”

He added: “Creativity and flexibility can’t be at the expense of the integrity of the single market and customs union.

“This would be not fair for Ireland and it would not be fair for the European Union.”

Barnier said the peace process should be preserved, the common travel area between Ireland and the UK protected and that there should be no return to a “hard border”, all of which the UK has also said it is seeking.

“Irish citizens in Northern Ireland must continue to enjoy their rights as EU citizens,” Barnier continued, calling for the UK to come up with a “unique” solution. But as the UK had chosen to leave the EU, it was its responsibility to come up with solutions, he said.

Barnier added that Brexit had to protect the very specific and interwoven “political, economic, security, societal and agricultural” issues on the island of Ireland.

Reports in Ireland suggested the document was heavily influenced by Dublin. In response, Brexit Secretary David Davis’s office claimed that Europe’s commitment to avoid checkpoints along the Irish border was a “very important step forward”.

“As the UK’s position paper set out, this is a crucial objective for the Government given the importance of the Northern Ireland peace process,” the UK Government said.

The Irish border is effectively invisible. It is 500km long, with 260 road crossings, a Dublin-Belfast rail link, tourist waterways and two million cars moving back and forth every month. In Dublin, the Irish Government said its priorities remain protecting the Good Friday Agreement and the peace process by avoiding a hard border and maintaining the Common Travel Area.

It called on May’s Government to make “substantive commitments and workable solutions” on the question of the Irish border.

Sinn Fein MLA John O’Dowd said: “The solution is clear from the EU paper, what is required is for the north to be designated special status within the EU. That is the way forward.”

DUP MEP Diane Dodds said putting the onus for solutions on the UK was unhelpful and designed to pile pressure on London.

Labour’s Conor McGinn, a supporter of the pro-EU Open Britain group, said: “Any hardening of the border would be disastrous, putting the economy and political stability at risk. The only way to retain a frictionless border on the island of Ireland, for goods and for people, is for the UK remain a member of the single market and the customs union.”