Brexit negotiator: Time limit necessary for any transitional arrangements
Any transition arrangements following Britain's withdrawal from the European Union must be time-limited to prevent them becoming permanent, the European Parliament's chief Brexit negotiator has said.
Guy Verhofstadt's comments come a day after Chancellor Philip Hammond told MPs that a transitional deal could be necessary to avoid instability across the continent.
But former Ukip leader Nigel Farage sounded an alarm that increasing talk of a transitional period following the completion of two-year withdrawal negotiations amounted to "backsliding" on the June 23 referendum vote for Brexit.
Mr Verhofstadt told BBC Radio 4's World at One: "Transitional arrangements are certainly possible, but it has to be, in my opinion, transitional arrangements with a time limit. It could be two or three years, I don't know - we are going to see what will be on the table.
"But a time limit is necessary because I have seen many times in politics that a so-called transitional agreement becomes an eternal or definitive agreement. That has to be avoided, so if there's a necessity for measures phasing in or phasing out, they have to be time-limited."
The former Belgian prime minister also said he expected "hundreds of thousands, maybe millions" of British nationals to be interested in taking up associate EU citizenship, under a plan which he is due to table for consideration as part of the Brexit deal.
Under the scheme, nationals of former member states would be able to pay to maintain their rights to live and work around the EU.
Theresa May has promised to trigger Article 50 of the EU treaties by the end of March, starting the formal countdown to Brexit by April 2019.
But businesses - particularly in the City - have expressed concerns about the possibility of a sudden "cliff edge" change in arrangements once the UK leaves the EU, particularly if it also quits the single market. And Mr Hammond's comments have raised the prospect of the UK not finally extricating itself from the EU until years after the Article 50 negotiations are concluded.
Mr Hammond told the Commons Treasury Committee on Monday that "thoughtful politicians" and officials on both sides of the English Channel could see the benefits in a transitional approach to " manage the adjustment between where we are now as full members of the European Union and where we get to in the future".
His comments come after suggestions in a leaked memo following a meeting with financiers that Brexit Secretary David Davis was "not really interested" in a transitional deal.
And Mr Farage said he was worried at the prospect of "Guy Verhofstadt teaming up with Philip Hammond".
"I think we are seeing backsliding," the Ukip MEP told World at One. "I think we are seeing time delays and I see transitional arrangements very much as part of that."
But the leader of Conservative MEPs, Ashley Fox, told the programme that he could envisage a transitional deal which involved the UK continuing to make payments into EU budgets for some time after Brexit.
"When we reach an agreement with the EU, there are likely to be transitional provisions within it so different sectors will be treated slightly differently, so there isn't going to be a cliff edge," he said.
"If we leave in the first half of 2019, there will be some provisions that carry on for a little while and I think that is very sensible... I don't see us paying on an ongoing basis but as part of a transitional agreement, that's something we might consider."
Mr Verhofstadt said that any deal under Article 50 needed to be concluded by the end of 2018 to allow time for it to be approved by national parliaments and the European Parliament before the next round of MEP elections in May 2019, which he did not expect Britain to take part in.
Shadow Brexit secretary Sir Keir Starmer suggested that a transitional arrangement would be needed because it might be "impossible" to secure a trade deal within the two-year Article 50 deadline.
Speaking at an event in London, he said: "Most sensible observers think that it is impossible to complete both sets of negotiations within the time frame available, particularly bearing in mind that - as was pointed out last week - the time frame is probably nearer 18 months than two years.
"So I think it is helpful that the Chancellor has acknowledged that there will have to be transitional arrangements, he is right about that. It's difficult to say how long they will go on, but it is right that the Government is at least acknowledging that there will be transitional arrangements."
But Brexit-backing Tory MP Peter Lilley warned against any arrangement that would involve Britain paying into the EU budget.
The former cabinet minister told BBC Radio 4's Today programme: "You've talked about the Chancellor having said we'd continue to pay.
"I didn't hear that in his statement and I'm sure he wouldn't."
Meanwhile, a study from a Lords Brexit committee due out later in the week will warn tens of thousands of banking jobs could be lost to the Continent from next year if there is no agreement on a transitional deal , The Guardian reports.
Peers have considered a range of potential job losses to financial services because of Brexit, including one putting the figure as high at 200,000, the newspaper said.