Ibec chief executive Danny McCoy said Ms May’s speech marked an “aggressive” step that ran counter to Irish interests.
“The possibility of the UK leaving both the single market and the customs union raises fundamental questions about Ireland’s future trading relations with the UK,” he said.
“This is an aggressive move by the UK, showing little regard for our trading relationship and for relations with other EU member states.”
Mr McCoy said the Irish economy was “uniquely exposed” because of its deep links with Britain.
Business groups in Britain were also critical.
Carolyn Fairbairn, the director general of the Confederation of British Industry said: “Ruling out membership of the single market has reduced options for maintaining a barrier-free trading relationship between the UK and the EU.”
Lobby groups representing SMEs here warned that the slump in sterling against the euro was hurting Irish-owned businesses hard.
“By embracing a hard Brexit, she has signalled very difficult times ahead for those firms that rely on selling to the UK market or are part of a sub-supply chain connected to the UK,” said Patricia Callan, the director of the Small Firms Association.
“The broader economy will also face substantial challenges as the UK considers changing its economic model, making it even more tax competitive.”
Ian Talbot, the chief executive at Chambers Ireland, said he welcomed Ms May’s comments on the common travel area, but “more clarity on barrier-free arrangements with Northern Ireland remains critical for businesses on both sides of the border”.