A group of major business lobby groups have written an open letter urging the government to preserve barrier free trade with Europe.
The letter is signed by leaders of the CBI and manufacturers’ body the EEF.
It says the way in which the UK leaves the EU and on what terms is critical for jobs and investment in the UK.
It says defaulting to trading by World Trade Organisation (WTO) rules would leave 90% of UK goods trade with the EU subject to new tariffs.
The letter says that would mean 20% in extra costs for the UK’s food and drink industry and 10% for car producers.
These significant costs would affect British exporters and importers, as well as those in their supply chains, it adds.
“We respect the result of the referendum, but the government must make sure that the terms of the deal to leave ensure stability, prosperity and improved living standards,” the groups write.
“Every credible study that has been conducted has shown that [the] WTO option would do serious and lasting damage to the UK economy and those of our trading partners.”
The letter calls for the government to “give certainty to business by immediately ruling this option out under any circumstances”.
It also suggests there is a wealth of evidence to suggest EU negotiations will not be completed within the Article 50 two-year timeframe.
“Many areas of regulation now up for discussion are highly complicated… The government should therefore secure agreement of a transitional period, to ensure that businesses can continue to operate with no ‘cliff edge’ change to current circumstances until regulatory and legal changes can be implemented.”
Last Sunday, the Prime Minister Theresa May said she would trigger Article 50, the clause needed to start the process of exiting the EU, by the end of March 2017.
The letter ends by saying that the UK voted to leave the EU but not to cause living standards to decline: “We want a Brexit that safeguards future prosperity for everyone across the UK.”