Theresa May broke off negotiations with Jean-Claude Juncker after details of a proposed Irish border deal emerged in the media, prompting the Prime Minister to leave talks to contact DUP leader Arlene Foster.
Ms Foster’s party, who are propping up the minority Conservative Government in Westminster, are adamant they would not accept any “regulatory divergence” between Northern Ireland and the rest of the UK.
The leaked deal suggested Northern Ireland would be offered a separate Brexit deal in order to avoid the implementation of the hard border – keeping the country in the EU’s customs union and single market in all but name.
Speaking on Newsnight, Urban suggested the failure to reach an agreement with Ireland was potentially the biggest signal Britain is heading for a so-called ‘soft’ Brexit.
He said: “If you take today’s languages and misunderstandings out of the picture and look at those three options – complete convergence, a partial deal for Northern Ireland or just this guarantee that proved so controversial – all of them would create some kind of border in the Irish Sea, even if Northern Ireland were taken in to be under the same regime in a limited or bigger way.
“And, we know that is totally unacceptable to the DUP and, actually, pretty unacceptable to the business community in Ireland, it doesn’t want impediment to trade across the Irish Sea.
“I think that gives us a clue that the softer form of Brexit is in sight for the Government.
“We’ve seen all sorts of other clues, whether it be Brexit language, the transition period, accepting the jurisdiction of the European Court of Justice during the transition period, the cannon of EU law – all of that stuff, it all trends in that direction.
“I think we’ve got a fascinating glimpse, through the prism of Ireland, at this possibility that there is a plan and it’s for a pretty soft form of Brexit.”
It is expected now Theresa May will hold meetings with her DUP colleagues, to thrash out a suitable agreement all sides can agree on.
Throughout the process, Brexiteers have accused the European Union of being the only party willing to implement a hard border on the island of Ireland.
Former Conservative MP and shadow chancellor Peter Lilley said: “Britain has said we will not put up border posts.
“The only people that have been threatening to do so are the European Union.”
He added: “What the EU has been doing so far is threatening to have exactly the same sort of border posts of the Irish border as they have on the border between Poland and Ukraine, or between Sweden and Norway. We are not putting up border posts.
“The only people who are threatening to do so are the European Union. And it’s good news they are prepared to think of special solutions that would enable not to have border posts.”