UPDATE 1-UK to tell EU it is ready to stay in customs union beyond 2021 -Telegraph

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LONDON, May 16 (Reuters) - Britain will tell Brussels it is prepared to stay in the European Union’s customs union beyond 2021 as ministers remained deadlocked over a future deal with the bloc, the Telegraph newspaper reported on Wednesday.

Prime Minister Theresa May's top ministers involved in Brexit strategy agreed this week on a new last-resort plan to avoid a hard Irish border, having rejected earlier proposals from the EU, the newspaper said.

Britain is due to leave the EU in March next year although it has secured a transitional arrangement to keep its trade ties with the bloc unchanged until the end of 2020, as long as a permanent deal can also be reached in the coming months.

Prime Minister Theresa May has said Britain will leave the EU’s customs union allowing the country to forge its own trade deals around the world.

But her cabinet is split over what kind of future customs system London should seek with the bloc.

Ministers meeting on Tuesday agreed that Britain should try to stay aligned with the customs union if technology needed to operate borders under one of the government’s proposals is not ready in time for 2021, the Telegraph said.

Officials have warned it may not be in place until 2023, the newspaper said.

EU chief negotiator Michel Barnier said on Monday no significant progress had been made in the Brexit talks since March. May wants to clarify her plans before an EU leaders’ summit in June and to seal a deal on Britain’s new relationship with the EU in October, less than six months before Brexit.

A spokeswoman for May declined to comment on the Telegraph report.

Reporting by Ismail Shakil in Bengaluru and William Schomberg in London