By Elizabeth Piper and Conor Humphries
LONDON/DUBLIN (Reuters) - Britain will step in to manage public spending in Northern Ireland and may call regional elections if political parties there fail to form a new power-sharing executive soon, Northern Ireland Minister James Brokenshire said on Monday.
But an agreement between pro-British unionists and Irish nationalists, which he said was achievable within days if the parties were willing to compromise, would be "profoundly in the best interests of Northern Ireland".
Irish nationalists Sinn Fein and the Democratic Unionist Party (DUP) have been in talks since a March election to form a new power-sharing government and each has blamed the other for missing repeated deadlines - most recently last Thursday.
A prolonged failure would ultimately force the British government to bypass the regional assembly and revert to direct rule from London for the first time in a decade, a move that could destabilize the political balance in the province.
Northern Ireland's political scene has been in crisis since the collapse in January of the power-sharing coalition mandated under a 1998 peace deal that ended three decades of sectarian violence in which 3,600 died.
The Irish and British governments, who are facilitating the talks, have warned that failing to reach an agreement would have "profound and serious" implications and limit Northern Ireland's influence in Brexit negotiations, although no one is forecasting a return to serious violence.
Brokenshire declined to set a new deadline for agreement, but warned that London's patience was wearing thin six months after Sinn Fein's withdrawal from government sparked the crisis.
"This hiatus cannot continue for much longer," he told parliament in London.
Brokenshire said if there was no resolution in the coming days, the British government would "urgently reflect" on whether to give civil servants extra powers to allocate resources and may consider introducing legislation to facilitate this.
While this falls short of direct rule, Brokenshire made clear the British parliament would keep taking on more and more powers over Northern Ireland the longer it remains without an executive.
The British government's other option would be to call new elections in Northern Ireland and Brokenshire said he would keep that under review - although he said another vote was unlikely to solve the impasse.
Before Brokenshire's speech, DUP leader Arlene Foster accused Sinn Fein of "political grandstanding" and demanding an unrealistic number of concessions from the talks.
Sinn Fein's northern leader Michelle O'Neill accused Brokenshire of "pandering to the DUP" who she said were blocking the legitimate demands of Irish nationalists.
Sinn Fein has questioned the neutrality of Brokenshire after his Conservative Party struck a deal last week with the DUP to prop up Prime Minister Theresa May's government.
Commentators see little prospect of agreement during the July marching season, when pro-British unionists celebrate the 1690 victory by Protestant King William of Orange over his Catholic rival at the Battle of the Boyne.
A major sticking point is Sinn Fein's demand for an Irish language act. Proposed measures such as bilingual road signs and quotas for Irish speaking civil servants are anathema to some unionists.
(Writing by Conor Humphries; Additional reporting by Kylie MacLellan in London and Ian Graham in Belfast; Editing by Louise Ireland)