A senior Irish MEP has suggested Northern Ireland should be given “associate membership” of the European Union after Brexit, with the Irish State paying its annual funding contribution.

Fine Gael’s Brian Hayes last night said such an arrangement would allow Northern Ireland the right to trade on full or limited terms into the EU, and not be subject to the tariffs.

He said while the Constitutional position of the North was settled and it would remain part of the United Kingdom, he said its trading relationship with the EU and with Ireland could be different.

Mr Hayes said it could be analogous to the current relationship between the EU and Gibraltar, or to Norway’s relationship with the Union.

“Would it be possible that the Irish State could pay Northern Ireland’s EU budget contribution in lieu of Northern Ireland being able to trade on full or limited terms into the EU?

“Are not the arguments for Northern Ireland similar to the arguments for Gibraltar? Both land borders represent a major disruption to trade and the single market in a circumstance where the UK is leaving the EU.”

“I believe that all options need to be on the table without questioning the fundamental and overarching reality that Northern Ireland is part of the UK and will be until a majority of its citizens decides otherwise.

There are particular arguments about the need to provoke a genuine private sector economy in the case of Northern Ireland as it comes out of 40 years of conflict. These are European regional arguments that the EU fully understands.”

My Hayes was speaking at an Institute of European and International Affairs even in Brussels last night.

He told his audience that Brexit will be a major geo-political event that cannot be under estimated. “Brexit is the greatest foreign policy challenge that Ireland has faced since joining the EEC in 1973.

“We could only join the EEC when the UK joined in the early 1970s. And the question will inevitably be asked now - can we in Ireland remain in the EU now that the British are leaving?

“It is an honest question that many people will ask and it deserves an honest answer. Those of us, who believe that Ireland should remain at the heart of the EU post Brexit and integrate further, need to be able to answer this question openly and honestly.

People who ask this question should not be treated as “crazies”. It is a legitimate question to ask and have answered.”

Mr Hayes referred to the call last week by Minister for Foreign Affairs Charlie Flanagan that special status be conferred on Northern Ireland. He pointed to the EU having played a central role in the development of the peace process.

“I believe finding a creative solution to what is a real Irish problem should be central to the negotiation.

“At some stage, the Irish government will need to spell out what they mean by a special status for Northern Ireland,” he said.

The Dublin MEP said he was also interest in the remarks of Jeffrey Donaldson of the DUP in which he said he was looking for a special deal for the island of Ireland that would allow free movement of people and goods.

“I regard this statement by Jeffrey Donaldson was very significant in recognising the importance of the all Island economy,” he said.

Mr Hayes suggested associate membership of the EU for Northern Ireland with this State picking up the tab for its funding contribution.

He told The Irish Times he did not know at this point of time how much that would cost.