Mr Varoufakis said that the most likely outcome ahead of the deadline for negotiations in March next year was “a fudge” that will fail to deliver certainty for citizens and businesses.
Mr Varoufakis spent six months as his country’s finance minister during which time he led negotiations with the so-called troika, the European Commission, European Central Bank (ECB) and the IMF, over the Greek debt crisis and said it was virtually impossible to negotiate with the EU.
Speaking to The Yorkshire Post at the Leeds’s offices of accountancy giant KPMG, Mr Varoufakis also said that he viewed the European Union as having a “bleak” future and that it would gradually degenerate over time.
“The most likely outcome, not the certain outcome, but the most likely, is that Mrs May is going to come back from Brussels with a pretty bad deal.
“Until at least 2021 -2022 nothing is going to change, the uncertainty is going to be pushed into the future.
“It won’t be a Norway-style agreement which has a certain degree of coherence, it will all be based on promises that London issues and Brussels pretends to accept when both know that they could never be fulfilled.
“That kind of fudge is going to avert a cliff edge outcome, which is a good thing, but it will not do what is necessary in order to create stability, to create continuity in the minds of business and citizens.”
Mr Varoufakis is an outspoken critic of the European Union but campaigned for the UK to remain part of the block during the 2016 referendum, saying that Britain would do better to try and reform the EU as a member state.
He said that calls for a second referendum in Britain were “crazy” and that there was insufficient leadership within Europe to deliver a new more successful chapter for the EU.
He said: “I am a Europeanist. I am very critical of the European Union in the same way I am very critical of the Greek state.
“But at the same time I do not wish to the see the dissolution of the Greek state I do not want to see the dissolution of the European Union.”
When asked how he viewed the EU’s future prospects he replied: “My answer to you question is one word - bleak.
“The EU is not in a good state. There is no leadership.
“Angela Merkel, who is the only politician with the clout to unite Europe, is now on the way out and the people who are going to follow her have no vision for Europe whatsoever.
“They do not have the clout to bring about a renewal of the European idea and to give Europeans the sense that the EU is a source of solutions and not just problems.
“And you can see that he fragmentation is happening.
“I very much fear that it won’t even need a process of French exit, of Italy leaving, I do not even think we are going to go that far.
“What is happening is a steady, gradual diminution of the EU.
“One day we will wake up without ever having the break like you did here in June 2016 to pinpoint exactly when the EU stopped being coherent.
“So I fear that [we will see] a steady degeneration rather than a sudden break.”