MPs voting against Theresa May's Brexit deal will cause 'crisis in British politics', Guy Verhofstadt warns

There will be “a crisis in British politics” if MPs vote down Theresa May’s Brexit deal, the European Parliament‘s chief Brexit negotiator has warned.

On the BBC's Andrew Marr Show, Guy Verhofstadt went on to predict such a defeat could lead Britain to elect a new government with a different position on Brexit.

Asked what would happen if British politicians voted against whatever deal the Prime Minister negotiates with the European Union, Mr Verhofstadt said the UK would leave the EU “without any arrangement”.

“There will be, I presume, a crisis in British politics,” he said. ”I presume maybe an election, maybe after that election a new government and maybe a new position of that government on Brexit.

“That’s unknown territory.”

During the interview, Mr Verhofstadt said he wanted Britain to stay, be a member of the European Economic Area and a member of a customs union.

“We want more than a free trade deal,” he said.

He said the EU was "not against" a transition period and it was "even necessary" to discuss and negotiate a future relationship, adding: "It's normal that in a transition, you simply continue the existing rules and the existing policies."

Mr Verhofstadt said it was not acceptable to alter free movement of people rules during any Brexit transition, warning it would be "penalising citizens".

He added it would be possible by March 2019 to agree a withdrawal agreement, a transition period and a political declaration describing a future relationship between Britain and the EU.

On Britain's aims for a special bespoke arrangement for financial services, the MEP stressed the necessity of a "level playing field".

He warned: "What we don't want is that with this whole agreement we establish a type of financial centre that is competing with the Continent not in a serious way by every time lowering taxes, lowering the type of rules so that we create a competitive disadvantage."

He added: "There has to be a level playing field in this and no competitive advantage, neither for the Europeans and not for the British."

Mr Verhofstadt said the EU understood Britain wanted to diverge in a number of fields and regain its sovereignty, but added it would have to take the "consequences" of it.

He said: "Everything is depending on the red lines of the British side. I say single market is the best solution for the British industry and the British economy, but the British Government doesn't want that because the red line is no freedom of movement of people."

Britain was plunged into political chaos after the Conservatives lost their majority in the House of Commons in last year’s general election.

Since then, Ms May has had to settle internal differences within her Conservative Party, which is split between those advocating a clean break from the EU, like Foreign Secretary Boris Johnson, and those who want as little disruption as possible to minimise the hit to Britain’s economy, such as Chancellor Philip Hammond.

Mr Verhofstadt’s remarks come as the Prime Minister spoke to Western leaders and officials in Munich to set out the Government’s vision for Britain outside the EU.

The loudest applause during her appearance came when the event’s organiser, German diplomat Wolfgang Ischinger, said: ”Things would be so much easier if you stayed.”

But the Prime Minister was adamant: “We are leaving the EU and there is no question of a second referendum or going back, and I think that’s important,” she told the Munich Security Conference.

“People in the UK feel very strongly that if we take a decision, then governments should turn not round and say no you got that wrong.”

Ms May is hoping to negotiate a transition deal next month which would leave Britain’s relationship with the EU virtually unchanged for around two years.

Additional reporting by agencies