Industry leaders have hit out at the idea of a "no deal" Brexit, warning that manufacturers will be badly affected if access to the single market is lost.
The EEF said manufacturing would bear the brunt of the UK "walking away" from the EU with no preferential access in place.
Ahead of Wednesday's triggering of Article 50, the EEF said manufacturing would be particularly vulnerable if trade was affected because of its strong relationship with the EU.
Having no deal rather than a bad deal would be "unacceptable" because of potentially higher tariffs on imports, higher compliance costs and other "barriers".
Terry Scuoler, chief executive of the EEF, said: "The EU is our sector's single biggest trading partner in a complex, tightly interwoven trading environment.
"Undermining the building blocks of this relationship – the single market and the customs union – without any other supportive structure in place would undoubtedly hurt our industry and condemn us to a painful and costly Brexit."
A separate report by law firm Shakespeare Martineau said business leaders were unprepared for Brexit and lacked robust plans.
They were said to be "overly ambitious" about new trade deals, with almost two thirds not having a task force to deal with the outcome of the EU referendum.
A survey of almost 500 businesses showed many did not know what to expect from leaving the EU.
Chief executive Andy Raynor said: "Business are flying blind, but they are flying nonetheless, and, in the absence of information, they are charting their own reality to get on with business."
Law firm Collyer Bristow said there was a 200% increase last year in applications for "exceptional talent" visas for work in areas such as engineering and medicine.
Spokesman James Badcock said: "Fears that Brexit will result in rule changes may have helped trigger the surge in visa applications from talented individuals."