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Brexit, trade deal talks possible at the same time, EU negotiator says

Britain and the European Union can simultaneously negotiate the terms of Brexit while also fleshing out the shape of their future relationship, according to the European Parliament's chief negotiator for the separation.

Guy Verhofstadt pointed to language in Article 50 of the EU's Lisbon Treaty, which governs the process for a member wishing to leave the bloc.

"In the treaty, Article 50 says withdrawal can be agreed taking into consideration the future relationship," the former Belgian prime minister said Jan. 30 at Chatham House in London. "It's a fantastic political text and it says it all: A withdrawal agreement in the light of the future relationship. That is literally the treaty and that is what we need to apply."

The EU will not be seeking to punish Britain for withdrawing, he added.

"We are looking for fair negotiations with U.K. authorities; that is what we are trying to do," he said. "Not in the sense that this has to be a punishment, [or that] this has to be revenge. On the contrary, it has to be, in fact, the search for a new partnership between a European Union more integrated, more united than ever before, and our British friends on the other side."

On the sidelines of the conference, Verhofstadt told S&P Global Market Intelligence that both sides should "let the negotiations begin" before looking into the issue of expanding the equivalence regime to allow financial services firms to trade freely between the EU and the U.K.

Verhofstadt's comments came two weeks after British Prime Minister Theresa May outlined a plan to leave the EU and define the new relationship the U.K. will have with it in the two-year span afforded by Article 50. May said in her speech that the U.K. will activate Article 50 before the end of March and would seek to cut a comprehensive free-trade deal with the bloc.

Yet Michel Barnier, the chief negotiator for the EU, said in response that Britain would have to negotiate exit terms first and a new trade deal only after that. Other European politicians have voiced similar views, and EU member states are also technically forbidden from negotiating trade deals of their own, although it is unclear how strictly that proviso will be applied to Britain during its exit talks.

Article 50's text states that after a member formally announces it is leaving: "In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that state, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union."

Meantime, Verhofstadt set out his own vision for the future of the EU, in the form of a majority-rule political union with a single government and defense force similar to those of the U.S. The new political entity that he envisages would include a fully fledged banking union, depositor guarantee scheme and financial rescue fund, as well as a treasury.

"The other possibility is full, further disintegration of the EU," he said.