Brexit has undermined the Good Friday Agreement that brought peace to Northern Ireland and has strained relations between Britain and Ireland, Irish Prime Minister Leo Varadkar has said.

In an interview on Saturday morning, he said the country was about to enter a difficult period because of the impact Brexit would have on the economy.

He also indicated that a Brexit deal would give renewed impetus to parties in Northern Ireland to reach an agreement to restore a devolved government in the region 22 months after the Stormont assembly collapsed.

“Brexit has undermined the Good Friday Agreement and is fraying the relationship between Britain and Ireland,” he told the Marian Finucane show.

“Anything that pulls the communities apart in Northern Ireland undermines the Good Friday Agreement, and anything that pulls Britain and Ireland apart undermines that relationship.”

He said if there was some clarity in the next couple of weeks or months, there will be “a window of opportunity to get the assembly going again”.

He went on to reiterate his pledge that there would be no return to a hard border in Ireland, whatever the outcome of Brexit negotiations, which is currently on a knife-edge.

Breakthrough in the offing

Varadkar was speaking just hours after the British and Irish governments signalled that there could be a breakthrough on the Irish border impasse within weeks, which would pave the way to a Brexit deal between the UK and the EU.

Simon Coveney and David Lidington, the UK Cabinet Office minister, said on Friday evening that there had been progress in negotiations that could resolve the deadlock and produce a deal this month.

At the same time, the Democratic Unionist party leader Arlene Foster indicated a deal was also in the offing after separate meetings in Belfast with the Brexit secretary, Dominic Raab.

“Goodness, we have been here on a number of occasions and I think we are close to a deal that will work for Northern Ireland, that is what we want,” said Foster, whose party threatened to pull the plug on the government less than a month ago if the Brexit deal involved a border in the Irish Sea.

Hopes of a breakthrough have risen in the last week after it emerged the EU has proposed a new UK-wide customs arrangement in addition to a backstop or insurance policy in relation to the Irish border.

Under the proposal, the UK would operate a “bare-bones” customs arrangement with the EU applying a common external tariff on imports from outside the EU, as is currently the case.