The UK should stay within the single market for five years after Brexit and Northern Ireland beyond that under “nominal” control from the UK, former Greek finance minister Yanis Varoufakis has said.

Speaking on a visit to Ireland, Mr Varoufakis, who was Greece’s finance minister in 2015, said Britain should apply for a five-year transitional arrangement to remain with the European Economic Area under “a Norway-style agreement” at the end of the three-year Brexit negotiations.

“That will give everyone a sigh of relief and an opportunity primarily for the House of Commons in London to debate amongst themselves what on earth they want to do in the post-Brexit world,” he told The Irish Times before appearing at the Kilkenomics economics and comedy festival in Kilkenny on Friday night.

Mr Varoufakis called on British prime minister Theresa May to end “these phony article 50 [Brexit] negotiations, which are not really negotiations” and to seek EEA status for five years to allow for the “restoration of sovereignty to the House of Commons”.

‘Impossible positions’

“If I were sitting here in Dublin, I would be pushing both Brussels and London in the direction of climbing down from their respective impossible positions,” said the 56-year-old economist.

A transitional model – similar to that Norway, which, as an EEA member, operates within the single market but is not a member of the EU – would be “ideal” for Ireland, Britain and Europe, he said.

Brexit negotiations were stuck in “a never-ending loop”, he said, and the only way Ms May can respect Brexit and create certainty was to secure the short-term EEA arrangement.

This would provide the EU and London with an opportunity “to alter their positions and come up with solutions that are now absolutely impossible”.

His “plan B” would involve telling London: “Either that, folks, or you have to accept that Northern Ireland is going to remain in the single market, and Mrs May, sort it out with the DUP.”

Ms May relies on the Democratic Unionist Party for a parliamentary majority at Westminster.

Beyond the five-year period, Mr Varoufakis said Northern Ireland could, with enough goodwill, remain within the single market with “nominal” jurisdiction and sovereignty from London.

“We need to be innovative,” he said. “We need to create new forms of sovereignty.”

Belfast Agreement

He described the Belfast Agreement as a “very innovative agreement” that allowed Northern Ireland to have “a complicated sovereignty regime.” By 2025 this could be taken further to allow Northern Ireland to remain long-term within the single market, he said.

Establishing a hard Border in Ireland would be “absolutely unheard of and despicable”, he said.

Assessing the state of the Irish economy, Mr Varoufakis said there were two Irelands: one connected to the booming tech sector and the other “going back to another cycle of boom and bust”.

Repeating his criticisms of Irish Government responses to the banking crisis, Mr Varoufakis described as “a major crime against logic” the State bailout of bondholders in banks that “were already dead and buried” and the Irish public being saddled with the debt.

“Even though we are in a boom situation, personally I cannot see how this legacy is going to augur well once the next downturn begins,” he said.