Taoiseach Leo Varadkar said the Republic needs to be prepared for a situation where the British government is unable to negotiate a deal to quit the European Union.
Mr Varadkar said he was optimistic a deal could yet be struck although he was “not afraid” of a situation where no agreement was reached between the UK and the EU.
The EU's chief Brexit negotiator, Michel Barnier, has said the bloc is drawing up contingency plans for the possible collapse of Britain's departure talks.
Mr Barnier, who last week gave the UK a two-week deadline to provide greater clarity on the financial settlement it was prepared to offer as part of the divorce deal, told France’s Journal du Dimanche newspaper the failure of the talks was not his preferred option.
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"But it's a possibility," he said. "Everyone needs to plan for it, member states and businesses alike. We too are making technical preparations for it. On 29th March 2019, the United Kingdom will become a third country."
The remarks came as Theresa May faces increasing pressure at home, with Tory and Labour MPs warning she risks a Commons defeat over Brexit within weeks if she continues to deny parliament a meaningful vote on the final deal with the EU.
Michael Gove and Boris Johnson, who led the Brexit campaign but infamously split when Gove withdrew his support for Johnson's Tory leadership campaign to run himself, have also joined forces to tell the prime minister that transition arrangements for Britain's exit from the EU must end in June 2021.
A letter to May from the pair leaked to the Mail on Sunday appears to make a veiled attack on the chancellor, Philip Hammond, who backed remaining in the EU and now wants a softer Brexit, for lacking "sufficient energy" in preparing for the UK's future outside the bloc.
Mr Barnier told the JDD it was vital that Britain increases its financial offer, thought to have been estimated by the EU at about €60bn, if talks are to move on from the divorce phase to future trade as the UK desperately wants.
Member states will decide at a summit on the 14th and 15th of December whether or not “sufficient progress” has been made on the core separation issues - the divorce bill, the Irish border and citizens’ rights - for negotiations to advance to the next stage.
“We want to reach an agreement within the next 14 working days,” Barnier said, so the summit’s draft conclusions to be circulated and approved in time. “Today, we are not there. The rendezvous will be postponed if progress is not sufficient.”
New treaty
EU diplomats have said that if the 14-day deadline is not met, trade talks would be delayed until February or March next year. If it is, Mr Barnier told the JDD, negotiations on a new treaty could start in January and would take “at least two years to conclude”.
Mr Barnier warned that without a deal on future trade, the EU and Britain would revert to World Trade Organization (WTO) terms and trading relations "like those we have with China".
This would have "consequences in multiple areas," he said, from "the capacity of British planes to land in Europe to that of dogs and cats to cross the Channel".
The only option for frictionless trade would be for the UK to remains in the customs union and the single market.
“That is an option that is still possible for us,” Mr Barnier said, “but Theresa May’s government prefers to leave the single market and the customs union and rely on a trade agreement.”
The Spanish newspaper El Pais also reported on Sundaythat Brussels was working on Brexit contingency plans, citing an internal document describing a Brexit preparedness group that has begun working in parallel with the bloc's negotiating team.
The paper said the working group was secret because acknowledgement of the existence of a “Plan B” can sometimes precipitate the eventuality it is designed to cope with.
"But the EU executive is already exploring the consequences of the worst scenario: a sudden Brexit," El Pais said.
The letter to May from the foreign and environment secretaries urged the prime minister to ensure members of her top team fall behind their Brexit plans by “clarifying their minds” and called for them to “internalise the logic”.
Marked “For your and Gavin’s eyes only”, a reference to the PM’s chief of staff, Gavin Barwell, it states: “We are profoundly worried that in some parts of Government the current preparations are not proceeding with anything like sufficient energy.
“We have heard it argued by some that we cannot start preparations on the basis of ‘No Deal’ because that would undermine our obligation of ‘sincere co-operation’ with the EU. If taken seriously, that would leave us over a barrel in 2021.”
Appearing on BBC One's The Andrew Marr Show, Mr Gove said he did not believe it was time to walk away from the talks and he would not seek to stop Mrs May if she decided to hand over extra cash to Brussels to secure a good exit deal.
"I wouldn't block the prime minister in doing what she believed was right," he said. Mrs May and David Davis should be "given the flexibility" they need to secure a good deal, Mr Gove said. –Guardian