LONDON (Reuters) - British Prime Minister Theresa May’s office has dismissed as “speculation” a newspaper report that suggests an all-UK customs deal will be written into the legally binding agreement governing Britain’s withdrawal from the EU

FILE PHOTO: Britain's Prime Minister Theresa May is seen after the ASEM leaders group photo opportunity during a summit in Brussels, Belgium October 19, 2018. REUTERS/Toby Melville/File Photo

The Sunday Times said the plan would resolve the vexed issue of the Irish border, which is the main stumbling block in the Brexit talks, by avoiding the need to treat Northern Ireland differently from the rest of the UK.

With just five months to go until it exits the EU, Britain's divorce talks are at an impasse, fuelling huge uncertainty among businesses and causing the value of sterling GBP= to see-saw on any news about a possible breakthrough in the talks.

Reuters reported on Friday that the EU has suggested a backstop post-Brexit customs arrangement that would cover all of the UK. This could give mainland Britain some scope to set trade rules while keeping the province of Northern Ireland aligned with the EU.

British housing minister James Brokenshire said on Sunday there was still an issue around Northern Ireland in the Brexit talks, referring to a yet-to-be finalised ‘backstop’ arrangement which would prevent a hard border between Northern Ireland and EU member Ireland if no better solution can be found.

“That very much remains our focus and attention in getting that deal,” he told the BBC.

Asked about the Sunday Times report, a spokesman at May’s office said:

“This is all speculation. The prime minister has been clear that we are making good progress on the future relationship and 95 percent of the withdrawal agreement is now settled and negotiations are ongoing.”

SPECIAL EU SUMMIT?

The Sunday Times said May’s cabinet would meet on Tuesday to discuss her plan and that she hoped there would be enough progress by Friday for the EU to announce a special summit.

EU diplomats told Reuters on Friday they doubted a deal could be completed in time for a tentatively scheduled summit on Nov. 17-18, but that it could perhaps come a week later.

Cabinet support for any exit agreement is crucial for May, whose ruling Conservative Party is deeply divided over Brexit. Some of her lawmakers want to oust May.

May also runs a minority government which relies on the support of Northern Ireland’s Democratic Unionist Party (DUP) to get legislation through parliament. The DUP has vowed to scupper any deal that treats Northern Ireland differently to the rest of the UK.

If she fails to win cabinet and parliamentary support for any deal, Britain faces the prospect of an unstructured Brexit - leaving the EU without any formal arrangements for trade, immigration and many other issues.

More than 70 business figures are calling for a public vote on the final terms of Britain’s exit from the EU, warning that the country faces “either a blindfold or a destructive hard Brexit”, The Sunday Times also reported.