“More spending, simple as that,” he told Reuters when asked about the consequences of plans to scrap the current power unit 'token' system and allow unrestricted development.
The change, confirmed last week by Renault Sport managing director Cyril Abiteboul, is part of a deal agreed with the manufacturers to provide privately-owned teams with far cheaper engines.
Formula One switched from V8s to a complex and costly V6 turbo hybrid power unit in 2014 and it soon became apparent that Mercedes was far ahead.
The German manufacturer's works team has won both drivers' and constructors' championships for the past two years while others using their engines have also had a considerable advantage.
Red Bull, champions for four years in a row between 2010 and 2013 with Renault power, finished fourth last year behind Mercedes, Ferrari and Mercedes-powered Williams.
“If you look back on the original technical working group meetings and minutes from 2012-13, the agreement at that point was that the engines would be frozen but teams that were behind would still be allowed to keep developing. That's not happened,” Newey said.
“So it becomes a spending frenzy...the numbers being spent by the big manufacturers are eye-watering and so I think potentially for companies such as Renault who aren't prepared to spend that sort of money, it means actually the gaps get bigger not smaller.”
Speaking at a Formula One charity auction (www.zoom-auction.com), Newey described as 'quaint' the notion that power units would converge in performance as a result of the development shackles being removed.
In exchange for supplying 12 million-euros engines that cost 20-25 million euros to make, the manufacturers were making sure of voting rights on key committees, he said.
That meant Mercedes and Ferrari could ensure, without complaint, that their own works teams still had an advantage.
Mercedes and Ferrari are each supplying three teams apart from their own this season, while Renault has two and Honda - the newest entrant which has more ground to make up - just McLaren.
“It's very curious to me that we have this set of regulations where the manufacturer has to supply the same hardware to other teams but it's no under no obligation to supply the same software and therefore the same performance,” said Newey.
“Nobody is complaining about this because the customer teams can't complain because their contract doesn't allow them to.”
Newey said Renault, which fell out with Red Bull last season but which has patched up a relationship that looked to be irreparable at one point, was an exception.
“They have always given the same power units in every sense of the word, including software, to their customer teams as their works teams,” he added.
“Of course it's an option for Red Bull and it's an option for Renault (to continue together),” he said, looking beyond this season when Red Bull will use Renault engines with Tag Heuer branding.
“The problem of course is that if Renault is not able to compete with the spend and development race then we are put in a position where neither they nor us can be fully competitive.”
Newey recalled how in the 1960s Ford and Colin Chapman, whose Lotus team had exclusive use of the dominant Cosworth DFV engine, put the sport first and agreed to supply rivals on equal terms rather than continue winning against weaker opposition.
“Unfortunately that attitude doesn't seem to prevail any more,” smiled the designer, whose team were cold-shouldered by Mercedes, Ferrari and Honda when they sought an alternative to Renault for 2016.
Red Bull won three races in 2014, but none last year, and Newey said the biggest gains were to be found in the engine.
“You can't photograph an engine, not the internals anyway. So if you have an advantage, you can lock it in for some time,” he said, suggesting that sometimes gains were only made when knowledge was passed on by movements between teams.
“That happened with Ferrari last season where some Mercedes engineers left and joined Ferrari and were able through their knowledge to bring a very considerable jump in the performance of the Ferrari engine,” Newey said.
“These engines are still relatively infant technology,” added the man whose cars have won titles for three teams.
“We have already seen the steps that can be made...there's no reason to suspect they've suddenly reached a plateau.”
Newey said the balance between driver, chassis and engine was “out of kilter” and nothing so far agreed for the future was going to change that.
“That is a very unsatisfactory position for Formula One to be in,” he added.
Original source: New F1 rules could cause spending race