Mr Osborne, who now edits the London Evening Standard, also said the country is now “poorer” as a result of the devaluation of the pound overseas, claiming that the Britain has “gone from being the fastest growing of the G7 to one of the slowest growing”.
He told BBC Radio 4’s Today programme the Government had shifted its position over the parliamentary recess after stating “no deal was better than a bad deal” in Theresa May’s Lancaster House speech in January.
“Well I think you start with this basic, I think, error in the Brexit campaign was that somehow Europe needed us more than we needed Europe,” he said. “The truth is we both need each other and in these negotiations in particular Britain needs a transition deal.
“Britain is not ready to crash out of the European Union in the spring of 2019, we don’t have the customs controls, the farm payment systems, the business arrangements that will allow that to happen, so we need to work with our European allies on that transition.”
Mr Osborne, who was accused by Brexiteers during the referendum campaign last year of running “project fear” with grim forecasts of the UK economy post-Brexit and an “emergency budget”, added that the Government has been busy producing a series of position papers to prove “they are serious about trying to do a deal”.
But, he warned, the EU 27 are holding out on the paramount issues of citizens’ rights and the financial settlement – often referred to as the divorce bill – because “they know they’ve got the upper hand”.
Mr Osborne’s comments come ahead of the third round of Brexit negotiations in Brussels next week with the Brexit Secretary David Davis and the European Commission’s chief Brexit negotiator Michel Barnier.