Mr Farry was speaking after Prime Minister Theresa May acknowledged Northern Ireland will require its own Brexit solution, after a meeting of EU leaders in Brussels.
He said: “Alliance is encouraged at the stronger rhetoric from the Prime Minister, indicating Northern Ireland has unique circumstances and needs a special Brexit deal.
“We have always made clear that a ‘one size fits all’ Brexit is not tenable and that special arrangements are required for Northern Ireland. However, the Government must go further and recognise that any hard Brexit, or indeed a no-deal scenario, would have major implications for this region. In particular if the UK as a whole does not create a fresh customs union with the EU then a hard border on this Island will be inevitable, with all the economic and political implications that flow from this.
“Alliance believes at the core of a special deal for Northern Ireland would be continued participation in the single market. It is important to stress that this will be entirely consistent with Northern Ireland’s current constitutional status and principal of consent. This would be a devolution max outcome.”