UK cedes Gibraltar and Northern Ireland to Spain

Prime minister Tony Blair is on the brink of signing an historic deal that will see the UK-owned outcrops of Gibraltar and Northern Ireland ceded to the Spanish, we can reveal.

The memorandum of understanding, signed by Blair, King Juan Carlos and Spanish Prime Minister José Maria Aznar will restore sovereignty over the Rock of Gibraltar to Spain, as well as the troubled region of Northern Ireland to add to the Spaniards' enclaves of Ceuta and Melilla.

The deal was bashed out in three days of talks between Blair and the Spanish government, insiders told The Rockall Times. Aware that the Spanish have been keen to reclaim Gibraltar since the signing of The Treaty of Utrecht, Blair offered up the colony on the condition that Spain take Northern Ireland off the British Government's hands at the same time.

A similar deal was reportedly attempted by the then foreign secretary Robin Cook three years ago when he offered Northern Ireland to Argentina as a two-territory deal with the Falkland Islands.

That fell through, it is said, thanks to resistance from President De La Rua who could not agree the finer details — in particular the decommissioning of the "Reverend" Dr Ian Paisley.

Sources close to the cabinet indicate they expect little resistance from the residents of the six counties. A spokesman said: "The loyalists will be pleased that they will never be subject to the rule of Dublin and the nationalists will no longer be able to moan about the legacy of Cromwell and other stuff that happened centuries ago."

The treasury is also keen on the arrangement with the savings on subsidies allowing Gordon Brown to reduce rather than raise taxes in the next budget — a potential bonanza of 4.7 pence a quarter to every man, woman and child.

Blair has given reassurances that there will be a referendum on the issue, but remains confident the Spanish will cast an overwhelming "yes" vote.

A side effect of the disposal of Northern Ireland is that the United Kingdom will cease to exist, thus rendering the pull-down selection fields in the address forms of several billion Web pages out of date.