The European Union has expressed "surprise" at David Davis's complaints about its planning for a "no deal" Brexit given the scenario was first put forward by Theresa May.
In a letter to the Prime Minister, the Brexit Secretary said he would urge the EU to drop measures and guidance that could require UK companies to relocate to Europe or risk contracts being terminated in the event of no deal.
Scottish First Minister Nicola Sturgeon described Mr Davis's "moaning" as "extraordinary" given the Government has set aside £3.7 billion to prepare to leave the EU without an agreement, and has repeatedly stated that "no deal is better than a bad deal".
And European Commission chief spokesman Margaritis Schinas told a daily Brussels briefing: "We are somehow surprised that the United Kingdom is surprised that we are preparing for a scenario announced by the UK Government itself.
"After all, it was Prime Minister May herself who said in her Lancaster House speech in January 2017, and repeated in her Florence speech in September, that 'no deal for Britain is better than a bad deal for Britain, it is right that the Government should prepare for every eventuality'.
"So we take these words by the Prime Minister very seriously and it is therefore only natural that in this house we also prepare for every eventuality."
In the letter obtained by the Financial Times, Mr Davis warns Mrs May that EU agencies have issued guidance to businesses stating that the UK will become a "third country" after Brexit in March 2019, with no reference to a future trade deal sought by both sides.
He said he would urge the European Commission's Brexit taskforce to withdraw the statements made so far, in light of the agreement reached in December to begin trade negotiations.
But Mr Schinas said the EU "don't feel there is anything new for us to say" about a transition period or trade deal, "since this is part of the next stage of the negotiation".
Mr Davis described the EU's moves as "potential breaches of the UK's rights as a member state" and insisted "we cannot let these actions go unchallenged".
But asked if the EU's work breached Britain's rights, Mr Schinas replied: "No."
Earlier, Ms Sturgeon tweeted: "This letter is extraordinary. A govt intent on leaving EU & continually talking about prospect of 'no deal' moaning about EU preparing to treat UK as a non member and for the possibility of 'no deal'. Unbelievable - or rather, increasingly believable from this inept UK government".
And Labour former minister Pat McFadden, who supports the Open Britain campaign for close ties with the EU, said: "The Government is implicitly threatening a no-deal scenario.
"It should come as no surprise that the EU is also preparing for this possibility."