Speaking on Sunday, the MEP, who is Parliament’s Brexit coordinator, outlined the possible consequences of there being no agreement struck between the EU and UK.
He also warned of the repercussions if both the European Parliament and Westminster Parliament vote down any deal between the two parties.
MEPs will have the right to vote on any agreement that is finally reached and deputies have repeatedly warned that its red lines, including on citizens’ rights, must be met before it considers giving approval.
RELATED CONTENT
One scenario of either no deal or a parliamentary rejection of any agreement, Verhofstadt cautioned, could be a political challenge to May’s leadership, resulting in a general election in the UK and “chaos.”
No deal before next spring would mean no transitional period for the UK and the UK “crashing” out of the EU at the end of March 2019, said the deputy.
He still remained hopeful that what he called “Brexit chaos” could be avoided and that the UK might still stay in either the single market and/or the customs union.
Speaking on the BBC’s Andrew Marr Show, Verhofstadt insisted that the agreement on the future UK-EU relationship should ensure that there is “no competitive advantage for either the UK or EU”.
He added, “Passporting will not be there, you have to be part of the single market.” He said, “There will certainly be something about financial services, but there will also be something about regulatory equivalence then, because what we don’t want is that with this whole agreement, establish a financial centre that is competing with the continent.”
He repeatedly told Marr, “We want a level playing field.”
The former Belgian Prime Minister added, “What Britain is asking for is a request for divergence in a number of fields and that we don’t want.”
Outlining his preference for the future relationship, he said he would like to see “more than a free trade agreement,” and that, “We should like to have Britain still in the single market, Britain still a member of the economic area, Britain member of a customs union, and so on.”
On citizens’ rights, he said that May’s current demands are “not very serious” and would amount to “penalising citizens”. He said that citizens’ “rights and duties will be the same during transition.”
During her trip to China at the end of last month, May raised the idea of different rights for EU citizens who arrive after March 2019, during a transition period expected to last until the end of 2020.
He said, “It’s not acceptable for us that rules will continue without change for financial services, for goods, for whatever other business, and only for the citizens, their situation will change. That is penalising citizens.”
He added, “For us that is not acceptable. We do not even want to be talking about it.”
The Liberal MEP was equally blunt when asked about UK hopes for a final deal that would mean different arrangements for different sections of the economy.
“That will not be the outcome of these negotiations. It cannot be the outcome.”
Verhofstadt also said he could not countenance a trade deal that would also see the UK seek advantage through lower taxes and regulations.
Ashley Fox, leader of the UK Conservative MEPs, said, "It is in the overwhelming interests of both the UK and the EU27 for the freest possible access to, and trade in, financial services to continue post-Brexit. Most people recognise that and I am confident the negotiators - who let's remember do not include Verhofstadt - will find an innovative solution.
"In the meantime, Verhofstadt would better serve parliament and citizens if he started taking a constructive approach to the Brexit talks rather than simply repeating what he regards as unacceptable."
Brexit will again come under the focus of MEPs at several meetings in Parliament later this week.