EU has warned trade talks cannot start next month unless agreement is reached, with Ireland unhappy with proposals to date

A final decision on the Northern Irish border cannot be made until a UK-EU trade deal has been agreed, Liam Fox has said, despite warnings from Brussels that trade talks cannot proceed unless an agreement is reached within days.

Ireland is seen as the key obstacle to proceeding to negotiations about a future trade relationship with the EU at a December summit, with the Irish government dissatisfied with the options offered so far to prevent a hard border with Northern Ireland.

Leo Varadkar, the Irish prime minister, has said he wants a written guarantee that there will be no hard border, which Dublin believes can be achieved only by keeping the region within the single market and customs union.

Fox said that option was out of the question. “We don’t want there to be a hard border, but the UK is going to be leaving the customs union and the single market,” he told Sky News’s Sunday with Niall Paterson.

Government sources conceded there was still some way to go on the question of the border, compared with the other two key areas the EU has said also need to see sufficient progress, the financial settlement and the rights of EU citizens.

Q&A Why is Dublin opposed to the idea of a hard border? Show Hide Ireland’s taoiseach, Leo Varadkar, has been much more sceptical than the UK about the potential for avoiding border posts via virtual checks on importers. Whilst agreeing with British ministers and EU negotiators that it is inconceivable for there to be a return to a hard border with the north, Dublin argues that the best way for the UK to achieve this would be by permanently remaining in a customs union with the EU and seeking single market membership like Norway through the European Economic Area. The UK has conceded that some of this will be necessary in its interim phase after Brexit, but hopes clever technological solutions can allow it have looser economic links in the long run. Varadkar is not alone in being sceptical about whether such a cake-and-eat-it customs and trade strategy is viable.

However, the government is likely to stress the common ground on both sides, that neither side wants a hard border with Ireland or physical border infrastructure and the option to agree to Varadkar’s written guarantee has not yet been definitely ruled out.

Fox said the UK had always come to special arrangements with Ireland that could be written into the final agreement but said there needed to be clarity about the future trading relationship with the EU before the border question could be settled.

“We have always had exceptions for Ireland. Whether it’s in our voting rights, our rights of residence in the UK, we have always accepted a certain asymmetry and that will have to be part of whatever agreement we come to with the European Union. But we can’t come to a final answer to the Irish question until we get an idea of the end state,” he said.

“And until we get into discussions with the EU on the end state that will be very difficult, so the quicker we can do that the better, and we are still in a position where the EU doesn’t want to do that.”

Fox’s suggestion that a deal on the Irish border won’t be finalised until later in the negotiations does not necessarily clash with the EU’s position. The 27 member states need only “sufficient progress” to be made by the next European council summit.

This will require what the Irish foreign affairs minister, Simon Coveney, described on Friday as “a road map” to how the British plans to avoid a hard border.

Coveney also dismissed a claim from Ukip that Ireland was threatening the UK, but insisted that his country must be protected in the Brexit process.

“Ireland is not threatening anybody, least of all a friend,” he said on Sunday, “but we remain resolute in our insistence on a sensible way through Brexit that protects Ireland.”

It will further require recognition from Whitehall that technology is not the solution to the problem and that Northern Ireland will be given a special regulatory status, a scenario hinted at by Fox.

In Brussels, however, there is a feeling that the British government has been underestimating the member states’ solidarity with the Republic on the issue.

Asked whether the Irish government would be allowed to hold up the widening of talks on to trade, one EU ambassador responded: “We trust in the Irish and the commission on this. There is complete unity.”

Warnings about the prospect of an Irish veto on progressing to trade talks at the December summit continued over the weekend. Ireland’s EU commissioner, Phil Hogan, told the Observer that the country would “continue to play tough to the end” over its threat to veto trade talks without border guarantees.

Irish MEP Mairead McGuinness, a member of Varadkar’s Fine Gael party, said she was “troubled” by Fox’s comments. “I hope that the UK is not holding the Irish situation to ransom in these negotiations. It is far too serious and far too critical,” she said.

John McDonnell, the shadow chancellor, said he was concerned by Fox’s comments and they could put talks ahead of the summit in jeopardy.

“The one thing that we don’t want to do is jeopardise any movement quickly, because we need movement to enable us to get into the proper trade negotiations,” he told ITV’s Peston on Sunday. “So I’m hoping that isn’t a Downing Street-sanctioned statement that’s he’s made.”

Barry Gardiner, the shadow international trade secretary, had earlier told the BBC’s Andrew Marr Show that Labour had not ruled out staying in the single market and forging a new customs union with the EU.

“It’s not our call and it would be foolish of an opposition to actually put out there and say this is the solution, when we’re not in the negotiating table itself,” he said.

“If we’re at the negotiating table, we can have those discussions. I’d be very happy if Theresa May wanted to move over and call that election and let us do that. But until we’re around that table it’s not sensible to say what you can get out of the negotiations, because you’re not sitting there like you and I are, looking at the whites of each other’s eyes and getting a deal.”

The Democratic Unionist leader, Arlene Foster, warned that any attempt to redraw the border into the Irish Sea would be opposed to her party, which holds the balance of power at Westminster.

Speaking after her party’s annual conference this weekend, Foster accused Hogan of engaging in “megaphone diplomacy” over his remarks. She said that any move to give Northern Ireland ‘special status’ and for the region to stay in the customs union would be against the principle of consent enshrined in the 1998 Good Friday agreement.

The DUP leader said this would lead to a redrawing of the border. “Every business I speak to does not want a border down the middle of the Irish Sea. The UK is our biggest market,” Foster said.

The DUP maintains a ‘confidence and supply’ agreement with the minority Conservative government.

A similar arrangement exists in Dublin, where the largest opposition party, Fianna Fáil, has for the last 18 months supported the minority Fine Gael government in confidence motions in the Dail and as well as key legislation such as the budget earlier this autumn.

That Dublin version of “confidence and supply” is breaking down over a row about a minister, a police whistleblower and a leaked email. Fine Gael insists the deputy prime minister, Frances Fitzgerald, will not be forced out of office over an email from 2015 that revealed the Garda Síochána had a strategy in place to smear a Garda officer who alleged corruption and malpractice in the force.

Fitzgerald told the Dublin Sunday Independent on Sunday that she had no plans to bow to “summary justice” over demands from Fianna Fáil and Sinn Féin that she should resign.

While Varadkar continues to talk with the Fianna Fáil leader, Micheál Martin, this weekend and early into next week, there is no sign yet of the political crisis in Dublin abating.

If they reach the end of the week without an agreement and if Fianna Fáil tables a planned no confidence motion in the government, the coalition in Dublin could collapse, resulting in a Christmas general election.

This would also mean Varadkar would go to the crucial EU summit on Brexit in mid-December not knowing if when he returned to Dublin he would be the country’s prime minister for much longer.