A new 500km electricity cable will be built to bypass Britain and connect Ireland directly to the European Union's energy markets after Brexit, under plans confirmed on Tuesday.

Taoiseach Leo Varadkar and French president Emmanuel Macron signed a letter on Tuesday at a meeting in Brussels pledging themselves to build the so-called Celtic Interconnector.

Ireland is expecting to face significant disruption when Britain leaves the single market because a large proportion of the country's trade travels through the United Kingdom and then onwards across the Irish sea.

The new power cable, which is also expected to include a fibre-optic telecoms connection, would be Ireland's only direct link to another EU member state once Britain leaves. It would carry around 700MW at high-voltage direct current, and run under the sea.

Energy regulators in the two countries approved the project at the beginning of May this year, and it has now received the political go-ahead.

Irish power grid operator Eirgrid said that the link “will be beneficial for both countries and Europe as a whole”. It would stretch from the country's south coast to Brittany in north west France.

It is planned to be completed by 2026 and will cost €930 million, with 65 per cent of the project's cost allocated to Ireland and 35 per cent to France.

However, because the infrastructure has been declared a Common Interest Project by the European Commission, it is eligible for EU financial support, with an application for a grant covering up to 60 per cent of its costs expected.

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While proposals for the connector predate Britain's EU referendum, it has been given a new impetus by the UK's vote to leave the bloc, which potentially puts Ireland's security of supply at risk.