An economic arrangement to avoid a hard border between Ireland and Northern Ireland cannot be extended to the whole of Britain, as London has proposed, the European Union's chief negotiator said on Friday.

European Union's chief Brexit negotiator Michel Barnier holds a news conference at the EU Commission headquarters in Brussels, Belgium June 8, 2018. [Photo/Agencies]

Britain proposed on Thursday a compromise solution for the Irish border issue that would see Britain staying tied to the EU's customs union for up to another year after an almost two-year transition period.

EU negotiator Michel Barnier told a news conference that the proposal posed a number of questions that had to be answered.

"Let me be very clear. Our backstop cannot be extended to the whole UK. Why? Because it has been designed for the specific situation of Northern Ireland," he said.

"What does it do? Northern Ireland would form part of our customs territory. What is feasible for a territory the size of Northern Ireland is not necessarily feasible for the whole UK."