A no-deal Brexit could cause a sharp rise in unemployment in Northern Ireland, the head of the civil service said.
Inability to prepare, EU tariffs and significant changes to exports could cause business distress, failure or the relocation of some companies to the Republic, a report from David Sterling said.
The UK will leave the EU without a deal later this month unless MPs support the Prime Minister’s deal or Britain secures an extension from the EU.
Mr Sterling said: “The consequences of material business failure as a result of a ‘no-deal’ exit, combined with changes to everyday life and potential border frictions could well have a profound and long-lasting impact on society.
“The planning assumptions include the possibility that, in some scenarios, a no-deal exit could result in additional challenges for the police if the approach appeared to be unfair or unreasonable for some of those most affected.”
Stormont departments have urged the UK Government to do all possible to secure an acceptable and manageable outcome to the divorce.
A letter sent by Mr Sterling to political leaders in Belfast said: “In effect, there is currently no mitigation available for the severe consequences of a no-deal outcome.
“These consequences do not arise from the possibility of checks or controls on either side of the land border, but would simply be the direct consequence of the legal position that would apply.
“This point is well understood by the business community.”
He said relocation of companies to the Republic could cause a “sharp increase” in unemployment.
The letter said Northern Ireland’s economy was particularly vulnerable given its high proportion of, and reliance upon SMEs (75% of all private sector employment) and businesses that trade directly with Ireland, Northern Ireland’s largest international export market.
The agri-food sector is a disproportionately larger part of the economy than in Great Britain and is located predominantly in rural areas.
The letter said: “It is particularly vulnerable given its reliance on cross-border supply chains in the production stage and in finished products.”
These concerns were highlighted in a UK Government paper last week.
The letter added: “There are also some important businesses in other regulated sectors, notably pharmaceuticals, where product must be certified within an EU member state and where finding ourselves outside the internal market and customs union in a few weeks could have serious implications.
“This creates a clear incentive to relocate into Ireland (and the wider EU 26) in order to continue to export to the EU.”