UP to 23,000 jobs are at risk as a result of the Northern Ireland Protocol and consumer choices and prices would also be harmed by the arrangement, a report by the Department for the Economy has claimed.
The report was published on Monday but was written before last week's announcements on the protocol, agreed between the UK and EU, to avoid a hard border on the island of Ireland.
The DfE has published a separate report by Retail Economics suggesting that goods coming into NI after the transition period would bear average tariffs of nearly 11% in a no-deal Brexit.
However, it's understood that report has been overtaken by the new detail of the protocol.
It will mean there will be no additional tariffs applied for retail goods at the Irish Sea border when they move into NI from Great Britain. But other extra costs are likely.
The research on the protocol says that even with a UK-EU free trade agreement, friction in GB-NI trade from the protocol would mean that GDP would be 1.7% lower than otherwise at the end of 15 years.
Employment would be around 1.1% lower - equating to around 10,000 fewer jobs across the board.
And the impact on the food and drink sector could lead to a 5.5% reduction in gross-value added and 1,200 fewer jobs in long-term.
But in a no-deal scenario, even greater friction could lead to the food and drink sectors losing 3,000 jobs between them.
There could be around 12,300 fewer jobs in the economy over the long term. And in a worse-case scenario, there would be 23,000 fewer jobs.
But the report said any alternative involving a land border on the island would also lead to increased costs.
Some of the solutions to reduce the impact of checks on good coming into NI from GB - including grace periods of up to six months for supermarkets and other retailers -are temporary.
The research on the protocol warns that it will have a long-term effect on NI's purchase of goods from GB even though the impact on the sale goods to GB will be more contained. It warns: "The potential economic significance of changes to the treatment of purchases should not be underestimated."
The report adds:"Indeed changes to the price of purchases will directly affect NI's economic competitiveness and any changes introduced with the NIP will have long lasting implications for jobs, consumer choice and prices more generally."
Northern Ireland buys 60% of its goods from GB with 43% of the goods it sells going to GB, the report says.
Frankie Devlin, partner on the Brexit Response Team at KPMG Ireland, said: "The clarifications provided last week... should mean that there should generally be no additional tariffs applied for retail goods at the Irish Sea border when they move into NI from GB.
"This will require the NI retailer to be eligible to register for a new Trusted Trader Scheme which will require them to certify that the goods are for sale to, or final use by end consumers in the UK.
"Although a further condition applies where goods will be subject to "processing" in NI, this is unlikely to apply to most retail sectors. However, that is not to say that additional costs will not have to be included in the cost of the product, as those goods may become subject to new tariffs on imports into GB before coming to NI and there will also be additional costs in the supply chain in respect of non-tariff costs..."
A spokesperson for the DfE confirmed the reports were completed before the protocol agreement in principle was published.
"The research highlights the importance of our trading relationship with GB for the economy, businesses and consumers.
"Building on this analysis, work is ongoing to understand the impact of the recent protocol announcement, some of which was only very short term in nature."