Political leaders in Northern Ireland have played down the prospect of reviving the Stormont assembly and executive, dampening a surge of optimism about a possible Brexit deal.

Unionist and nationalist parties voiced scepticism on Friday that they could break the region’s 998-day political impasse, leaving a major obstacle in the path of British and EU negotiators in Brussels.

Any Brexit deal is expected to require democratic consent for Northern Ireland’s continued alignment with the EU’s single market in goods, a conundrum with no obvious solution if Stormont remains mothballed.

Almost 1,000 days on from the collapse of power-sharing, Sinn Féin and the Democratic Unionist party (DUP) traded blame for the paralysis and unveiled no plans to restore devolution at Stormont.

Robin Swann, the leader of the Ulster Unionist party (UUP), called the inability of Northern Ireland’s two biggest parties to share power an abject failure of politics. “Their toxic mixture of arrogance, disrespect and incompetence has led the country to where it is today,” he said.

Stormont collapsed in January 2017 over a botched renewable heating initiative, the so-called cash for ash scandal. The biggest obstacle to the restoration of power-sharing is an Irish-language act.

Colum Eastwood, the leader of the moderate nationalist SDLP, said there was negligible progress despite urgency over Brexit and atrophying public services. “The cold truth is that we are no closer to Irish-language legislation now than we were three years ago. We are facing a national emergency on this island as a no-deal Brexit draws nearer.”

The murder of the journalist Lyra McKee in April by dissident republicans galvanised British and Irish officials to shepherd parties into talks at Stormont, with all sides expressing concern at armed groups filling the political void.

Talks stalled amid mistrust between the DUP and Sinn Féin. Not even the imminent decriminalisation of abortion on 22 October – unless the assembly reconvenes before that date – persuaded the anti-abortion DUP to return.

Naomi Long, the leader of the Alliance party, called the political stalemate “shameful”. A campaign group, We Deserve Better, is due to hold a protest outside Stormont on Sunday.

The gloom in Belfast contrasted with hope in Brussels after British and EU negotiators got the green light to enter a “tunnel” of intense talks to try to hammer out a Brexit deal.

There have been two key sticking points: Downing Street’s insistence on a customs border on the island of Ireland; and a mechanism for gaining democratic consent for Northern Ireland’s alignment with the EU’s single market . The latter had raised anxiety in some quarters over a DUP veto on trading arrangements.

Thursday’s meeting between Boris Johnson and his Irish counterpart, Leo Varadkar, ended with both sides declaring a “pathway” to a possible Brexit deal, suggesting compromise on both issues.

After speaking to Johnson later on Thursday Julian Smith, the Northern Ireland secretary, told the BBC there would not be a situation where “one community has a veto” over Brexit plans.

He said there was “a range of options” for finding consent. He did not rule out a Northern Ireland-only referendum. “The key thing is we have to have regard to the Good Friday agreement and have regard to the need to have a cross-community approach to how we resolve this.”

The absence of a DUP veto would alarm the party’s leaders – Arlene Foster and Nigel Dodds – as well as its grassroots.

Even more problematic would be any fudging on customs that could be interpreted as creating a border along the Irish Sea, a “blood red line” for a party dedicated to protecting Northern Ireland’s status in the UK.

Rival unionists pounced on that possibility. Jim Allister, the leader of the Traditional Unionist Voice party, said: “If the proposals we’re beginning to hear about are correct it would totally disintegrate that economic unity … No matter how you dress it up, that is a fundamental assault upon our position within the United Kingdom.”

Jim Nicholson, a UUP former MEP, said the region could be left on the “window ledge” of the union. “I fear that Northern Ireland is being offered up by Boris Johnson as the sacrificial lamb to save Brexit for the rest of the UK, the ERG and especially English nationalists.”

There was no immediate response from DUP leaders. The party’s 10 Westminster MPs and influence over some hardline Tory Brexiters could make or break any deal that emerges from Brussels.

Northern Ireland’s business community has repeatedly warned of ruin if the UK leaves without a deal. Two-thirds of the region’s small- and medium-sized enterprises with investment plans have either cancelled or postponed them owing to the uncertainty, according to the latest AIB Brexit Sentiment Index, a quarterly survey. Its Northern Ireland index has reached -41, an all-time low.