The European Union risks a populist-nationalist “nightmare” by the middle of the next decade unless centrists can win greater public backing for the European cause, the liberal leader Guy Verhofstadt has said.

Elections this May could herald a big shake-up of the European parliament. The duopoly of centre-right and centre-left is expected to lose its majority for the first time in 40 years of direct elections although Emmanuel Macron’s La République En Marche (La REM) is expected to win seats for the first time, boosting liberal forces.

Verhofstadt, the leader of the European parliament’s Alliance of Liberals and Democrats for Europe (ALDE) since 2009, said pro-European centrists had “a last chance” after the vote to wrest back ground from nationalists and populists before the next electoral contest in 2024.

In an interview with the Guardian and five continental papers, the former Belgian prime minister said the EU needed an overhaul – managing the eurozone, migration and common defence – if it was to gain greater public support.

“Nothing is eternal. Nothing. Not all political institutions are eternal. To reform is a duty that we have … and if if we fail, then the tragedy, the nightmare will become reality,” he said.

Verhofstadt endorsed the “European renaissance” promoted by Macron in a pan-European column this week. He said the expected arrival of La REM MEPs would create a bloc broader than the current ALDE but he had no ambition to lead it. “A new centrist, pro-European reformist political force” was needed as an alternative to nationalists but also the status quo, Verhofstadt said.

He ruled out a future alliance with Italy’s Five Star Movement, because of the power-sharing agreement with the far-right League party led by Matteo Salvini.

Verhofstadt faced a backlash from his group two years ago when he sought to bring the Five Star Movement into ALDE, out of Nigel Farage’s Eurosceptic alliance. Rejecting suggestions of a mistake, Verhofstadt said it was “now no longer possible” for Five Star to join the liberals, which he said was a pity because of the pro-European MEPs in its ranks.

A scathing critic of anti-EU populist leaders, whom he described as “enemies”, Verhofstadt claimed Salvini wanted migrants to come to Europe because it allowed the Italian leader to play on people’s fears. “Salvini, he hopes that more are coming because he will get more votes, because the fear will be bigger.”

Verhofstadt has also crossed rhetorical swords with Hungary’s prime minister, Viktor Orbán, over migration and the rule of law. The MEP accused his political rivals in the centre-right European People’s party (EPP) of “lacking political courage” in dealing with Orbán after the European commission president, Jean-Claude Juncker, was targeted in an anti-EU poster official campaign with antisemitic overtones. There have been “awful posters in Budapest for months and months”, Verhofstadt said, referring to campaigns against him as well as the Hungarian-born philanthropist George Soros and the Dutch MEP Judith Sargentini, who launched the rule-of-law sanctions process against Hungary.

The leader of the EPP, Manfred Weber, gave an ultimatum to Orbán on Tuesday to stop attacks on the EU, apologise to the EPP and allow Soros’s Central European University to continuing issuing US degrees from Budapest in order to avoid his party’s expulsion from the group.

Verhofstadt has been accused by political rivals of delaying debate into the affairs of his own “problem” leader, the billionaire Czech prime minister, Andrej Babiš, a member of the ALDE group who stands accused of a conflict of interest over EU funds.

Verhofstadt said Babiš would be obliged to “repair” a conflict of interest identified by European commission lawyers before the European elections. “We [the ALDE] will scrutinise it in the coming weeks and coming months before the elections so we are sure that Mr Babiš is responding.”

Verhofstadt is best known in the UK as the European parliament’s Brexit coordinator, but he does not want to prolong his work.

Extending Brexit talks for a long time without a clear outcome from the British parliament in next week’s vote would be “the worst thing” for the EU, he said, claiming that Brexit was sapping the EU’s ability to agree on contested subjects such as eurozone reform and migration.

“It is not only a question of time; mentally we are busy with Brexit. In the coming years we have to avoid that we are again busy with Brexit.”