No-deal preparations risk becoming a self-fulfilling prophecy, Scottish Brexit Minister Michael Russell has said.
The SNP Minister was speaking after a joint ministerial council meeting of the devolved administrations, which overran by 30 minutes.
Scottish, Welsh and Northern Irish representatives were talked through the Chequers deal by Cabinet Office Minister David Lidington, who appealed for his counterparts to “pull in the same direction”.
However Mr Russell said the potential for no deal “hung very heavily” over proceedings and was “utterly unacceptable”.
He said: “There is a real problem in the time, effort and resource it's absorbing and of course there is a danger that becomes self-fulfilling.
"Organisations and businesses are preparing for a no deal.
"If the momentum behind that were to continue to increase then it might just happen. I think it needs to be ruled out."
The SNP minister refused to rule out a second Scottish independence referendum because "what this is leading to is chaos, absolute chaos".
He added: "At some stage people will have to be asked what they want to do.”
He said it would be "a false distinction" that the SNP should get behind Theresa May's plans to avoid a no-deal Brexit.
He added: "Chequers itself is clearly not a deal.
"We're not going to be dragooned into choosing which part of the Tory party we support.
"The fact we're at that stage shows we're in yet another episode of a 40-year civil war in the Tory party.
"The trouble is all of us are collateral damage in those circumstances."
Speaking at the Scotland Office later, Scottish Secretary David Mundell stressed preparations for no deal were essential for a responsible government.
He said: "It would be wrong not to take into account that we could end up in a no-deal scenario, so certain measures have to be taken and put in place by March next year.
"What all of this shows is how important it is to get a deal and how important Chequers is.
"We want other political parties to rally round the Prime Minister as she goes into this vital part of these negotiations so we don't end up with a no deal."