German companies with a presence in the UK should be planning for a "very hard Brexit", Germany's biggest industry body has warned.
German industry looked "with concern" at the progress of the Brexit talks, said the boss of the Federation of German Industries (BDI), Joachim Lang.
Britain "is lacking a clear concept despite talking a lot," he added.
Leave campaigners said that if Britain walked away without a deal it would be because of EU negotiating delays.
But Britain would thrive nonetheless, said Richard Tice, co-chair of Leave Means Leave.
A hard Brexit implies the UK failing to reach a trade deal with the EU, something some UK business lobby groups argue will be highly damaging for the economy.
The BDI said it had set up a task force to prepare contingency plans for the UK's departure from the EU, scheduled to take place in March 2019.
According to the Reuters news agency, the task force involves major firms including Airbus, Siemens and Deutsche Bank.
Mr Lang said the Conservative Party in the UK was deeply divided over Brexit, as shown by this week's conference of the party, held in Manchester.
"German companies with a presence in Britain and Northern Ireland must now make provisions for the serious case of a very hard exit," he added.
"Anything else would be naive."
But Mr Tice said: "The Federation of German Industries is right that there is a chance that Britain will walk away from negotiations and move to World Trade Organisation rules.
"They are wrong, however, that this is because of Britain 'lacking a clear concept'. There is only one side delaying talks and that is the EU. They have acted to purposely obstruct the process."
He said the BDI should be pressing German chancellor Angela Merkel to get the EU "to stop blocking trade talks... It is the EU27 who will suffer most in the event of no deal - Britain will thrive under WTO rules."
The UK is Germany's third-biggest export destination and its fifth most important trading partner.
It is also the German car industry's biggest export market.
German carmakers and suppliers employ about 9,000 people in the UK at 95 different sites.