BERLIN (Reuters) - Chancellor Philip Hammond told a German newspaper that it would be a “catastrophe” for the situation in Ireland if Britain and the European Union failed to find a solution during talks on Brexit.

Britain's Chancellor of the Exchequer, Philip Hammond, leaves 11 Downing Street, in central London, Britain March 21, 2018. REUTERS/Toby Melville

Northern Ireland, which will become Britain’s only land frontier with the EU after Brexit in March 2019, remains the most difficult issue in talks between Brussels and London and a threat to peace in the British province.

“The worst result for the Good Friday Agreement would be no solution between the EU and Britain, that would be a catastrophe for the situation in Ireland,” Hammond told the Frankfurter Allgemeine Zeitung (FAZ) in an interview published on Wednesday.

Hammond did not say whether he was referring specifically to a solution to the Irish border question, or to a comprehensive deal for Britain’s divorce from the European Union.

Britain and the EU are committed to keeping a free flow of people and goods over the Irish border without returning to checkpoints which would be a reminder of the three decades of violence largely ended by the Good Friday Agreement of 1998.

However, no solution has yet been found for any customs checks needed after Brexit and a backstop plan could effectively isolate the Northern Ireland economy from mainland Britain.

Hammond also said Britain would honour its financial obligations to the EU after its departure and the payments could total up to 39 billion pounds.

“The payments extend over a very long period of time because they also include pension entitlements,” Hammond, who met German Finance Minister Olaf Scholz this week, told the FAZ.

London and Brussels have agreed on the rules to calculate Britain’s payments after Brexit without establishing a fixed sum. Asked what the bottom line would be, Hammond added: “We’ll end up somewhere between 35 and 39 billion pounds.”

Britain and the EU have agreed a transition period of 21 months that will follow Britain’s departure from the bloc during which firms will have unchanged access to the bloc’s markets.

Hammond said the British people’s decision to leave the EU would not be reversed.

“It would be best if we remained in a close relationship with European partners which would allow us to continue to put on a united front in international trade issues,” he told the German daily.

Free trade and open markets have brought “huge wealth” for Europeans, Hammond said, adding: “We should continue to defend this.”

Hammond said he hoped that trade talks between Washington and Brussels would lead to an agreement in which the United States would permanently exempt the EU from U.S. steel and aluminium tariffs announced last month.