Leaving the EU without a deal will cause a "constitutional disturbance", Sir Keir Starmer has said.
The shadow Brexit secretary was speaking as Prime Minister Theresa May was meeting business leaders from across Europe on Monday to discuss the future of UK-EU trade post-Brexit.
CBI director-general Carolyn Fairbairn said the Government needed to clarify what the terms of trade would be with the EU as firms are starting to trigger contingency plans for withdrawal.
Sir Keir told BBC Radio 4's Today programme: "No deal is a very, very bad outcome.
"Taken literally, it means we have not agreed anything, and that means we haven't agreed anything about EU citizens, we haven't agreed anything about the border in Northern Ireland, we haven't agreed anything on security.
"I think that sort of no deal is unthinkable.
"In those circumstances I think the Government would have to seriously consider whether it could continue.
"There will be a real crisis of confidence. A constitutional, sort of, disturbance. And probably all sorts of emergency legislation. And that's why we shouldn't casualise no deal."
With the battle over Brexit returning to the Commons this week as the landmark EU (Withdrawal) Bill goes into committee stage, Sir Keir said he hoped for support from Tory rebels for a Labour amendment allowing the European Court of Justice (ECJ) to maintain its role during a transition period.
Sir Keir said a future relationship with the ECJ after transition would be a "matter for negotiation".
At the gathering of business leaders, Mrs May will attempt to win support from European businesses for her goal of moving the negotiations on to trade talks.
Ms Fairbairn told Today: "This is an important meeting because the urgency that is shared by businesses across Europe is growing by the day.
"The big message today is around mutual interest."
She said 10% of firms had enacted their contingency plans to deal with Brexit and another 25% would do so by the end of the year.
Groups represented include the BDI and BDA from Germany, Medef from France and the EU-wide BusinessEurope.
Brexit Secretary David Davis and Business Secretary Greg Clark will also attend the Downing Street event.
A leaders' summit will take place next month and the European Union's chief negotiator, Michel Barnier, has insisted the UK has to be much clearer on issues such as citizens' rights, the Irish border and the UK's financial settlement before trade talks can open.
The meeting comes as Cabinet tensions on Brexit continued to play out after a letter from Foreign Secretary Boris Johnson and Environment Secretary Michael Gove giving Mrs May apparent instructions on how to organise withdrawal emerged.
Transition arrangements for Britain's exit from the European Union must end on June 30 2021, the Cabinet ministers demanded, according to reports.