* Britain must propose realistic border solution - Tusk
* Irish PM says backstop deal will apply if not
* Says life will be different for UK financial services (Adds detail, quotes)
By Padraic Halpin
DUBLIN, March 8 (Reuters) - Brexit negotiations risk stalling if Britain does not present a realistic solution for the future of the Irish border after London rejected an EU fallback proposal last week, European Council President Donald Tusk said on Thursday.
Britain’s government has said it does not want a customs union with the EU, without which the EU says it would need to regulate Northern Ireland’s trade to avoid a return of customs checks.
However British leader Theresa May, backed by her hardline pro-British Northern Irish parliamentary allies, said that no prime minister could ever agree to such terms as they would “threaten the constitutional integrity of the UK”.
“When I was in London last week, I heard very critical comments by Prime Minister May, and others, about the way the Irish border issue was presented in the draft Withdrawal Agreement,” Tusk told a joint news conference with Irish Prime Minister Leo Varadkar in Dublin.
“While we must respect this position, we also expect the UK to propose a specific and realistic solution to avoid a hard border. As long as the UK doesn’t present such a solution, it is very difficult to imagine substantive progress in Brexit negotiations.
“If in London someone assumes that the negotiations will deal with other issues first, before moving to the Irish issue, my response would be: ‘Ireland first’.”
Northern Ireland will have the UK’s only land border with the EU after Brexit, and Varadkar has also urged May to spell out her proposals.
He said on Wednesday that Dublin must have certainty that if a better option is not available, Brussels’ proposal to establish a “common regulatory area” between the island of Ireland and the 26 other EU states will apply.
Addressing comments by British finance minister Philip Hammond on Wednesday arguing for a bespoke deal or an ambitious free trade agreement covering financial services, Tusk said the EU cannot offer the same in services trade as it could in goods.
He said unlike with the trade of goods, services are about ensuring common rules, common supervision and common enforcement and that is why free trade agreements do not have detailed rules for financial services.
“We should all be clear that also when it comes to financial services, life will be different after Brexit,” Tusk said. (Reporting by Padraic Halpin; editing by John Stonestreet and Robin Pomeroy)