Northern Ireland parties at an impasse, creating headaches for Britain

The British government is to move to directly impose an annual budget on Northern Ireland for the first time in a decade after efforts have failed to form a power-sharing government between Irish nationalists and pro-British unionists.

The move is a major step towards a return to direct rule from London, which many fear would destabilize the delicate political balance in Northern Ireland.

It also creates a major headache for British Prime Minister Theresa May as she negotiates Britain's exit from the European Union.

Irish Nationalists Sinn Fein and the pro-British Democratic Unionist Party have shared power in Northern Ireland for a decade under the 1998 Good Friday peace agreement, which ended three decades of violence that left 3,600 dead.

But Sinn Fein pulled out in January, complaining it was not being treated as an equal partner. The latest round of talks on re-establishing the devolved executive collapsed Wednesday.

"Sinn Fein is disappointed that the last few weeks of negotiations have ended in failure," Sinn Fein's leader in Northern Ireland, Michelle O'Neill, told journalists.

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Sinn Fein president Gerry Adams said the party was open to dialogue, but only if it's meaningful.

Britain's minister for Northern Ireland, James Brokenshire, said as there was no immediate prospect of a new executive being formed, he had no choice but to start the process of setting a budget directly from London to ensure funding for essential services.

"This can't simply continue forever and a day ... There are decisions that have been stored up that have to be taken," he told journalists. The budget process could be handed back if agreement is reached between the two parties, he added.

British-only rule a non-starter: Ireland

In a bid to put pressure on the politicians, Brokenshire said he would take advice as to whether the salaries of the deputies in the Northern Ireland devolved parliament should be cut while there is no executive.

He said such a move would require legislation in the British Parliament at Westminster. The budget move also revives the question of what role the government of the neighbouring Republic of Ireland should have in the governance of Northern Ireland if power-sharing collapses.

The DUP helped prop up May's goverment in a confidence and supply deal after her disappointing result in the June election, but promised funds for Northern Ireland could only start to be delivered after a power-sharing arrangement is finalized.

Dublin argues that under the Good Friday Agreement, it should have a role in the direct running of the region, which borders Ireland, if power sharing breaks down.

In September, Foreign Minister Simon Coveney said "there can be no British-only direct rule," which prompted a British government spokesperson to say Britain would "never countenance" joint authority.

Sinn Fein on Wednesday called on Ireland to play a role, saying the British and Irish governments should together "act urgently to deliver equality" in Northern Ireland.

Coveney on Wednesday said the collapse of talks was "regrettable and deeply concerning," and that direct rule could complicate relations with London at a time when it is trying to negotiate favourable terms of Britain's exit from the European Union.

"The prospect of direct rule in Northern Ireland and the Irish government's insistence on having a role in that – an appropriate role consistent with the Good Friday Agreement — is not where we want to be," he told RTE radio.