IF NORTHERN Ireland is to stay in the single market and customs union after Brexit, then it is “a practical necessity” that Scotland does too, Nicola Sturgeon has said.

The First Minister was reacting to reports that officials from the UK and EU have drafted an agreement that will in effect keep Northern Ireland in the single market as the only viable way to make Brexit work without having to build a hard border.

Speaking yesterday morning at the end of a week technical between Brussels and London, Michel Barnier, the EU’s chief Brexit negotiator, said border checks would be unavoidable. Earlier this week Downing Street insisted the UK would not remain in a customs union.

Barnier also told reporters he was confused by the UK government’s negotiating positions and even suggested that could mean the 21 month transition period after Brexit day could be called off.

Those comments immediately saw the value of the pound plunge.

Brussels sees the transition period as the UK effectively staying in the EU after Brexit day next year, with the rules as they are now, but without any representation or say. London, however, wants both a say in EU rules that might apply during the transition and wants EU citizens arriving in the UK during the transition period to be treated differently those already living here.

Barnier said he was “surprised” by the Tory position.

“When I met David Davis in London on Monday and once again in negotiations in Brussels this week, the UK insisted that we should reach an agreement in March on this transition period,” Barnier said.

“At the same time, however, our partners set out a certain number of disagreements which I regard as substantial. I don’t understand some of the positions of the UK.”

On Ireland, Barnier said it was “important to tell the truth.”

“The UK decision to leave the single market and to leave the customs unions would make border checks unavoidable. “Second, the UK has committed to proposing specific solutions to the unique circumstances of the island of Ireland. And we are waiting for such solutions.

“The third option is to maintain full regulatory alignment with those rules of the single market and the customs union, current or future, that support north-south cooperation, the all-island economy and the Good Friday agreement.

“It is our responsibility to include the third option in the text of the withdrawal agreement to guarantee there will be no hard border whatever the circumstances.”

The First Minister tweeted: “If NI stays in single market, the case for Scotland also doing so is not just an academic ‘us too’ argument – it becomes a practical necessity. Otherwise we will be at a massive relative disadvantage when it comes to attracting jobs and investment.”

The EU has long said that the UK will have to effectively choose between the single market and a hard border in Northern Ireland. But Tory ministers have insisted an alternative is possible

In December, the UK said it would prevent that hard border by continuing alignment with some EU rules.

Barnier said the EU must now start legally defining how the alignment would work.

The Eurosceptic Tories and the 10 Democratic Unionist party MPs, who the Prime Minister relies on for a majority, are strongly opposed to a different set of circumstances for Northern Ireland.

But in Northern Ireland, there are fears putting up a hard border could be a threat to the peace process. Earlier this week, George Hamilton, chief constable of the Police Service of Northern Ireland, warned that a border, with customs points and check would become a target for armed groups.

“The terrorists only have to be lucky once and get a result with catastrophic consequences,” he said.

Davis, the UK’s Brexit secretary, told press he was surprised by Barnier’s reaction.

“Given the intense work that has taken place this week, it is surprising to hear that Michel Barnier is unclear on the UK’s position in relation to the implementation period,” Davis said.

Brexiteer Tory MP Jacob Rees-Mogg said the UK didn’t need a transition.