"There may also be a rise in public disorder and community tensions", it added.
"In reality we will certainly be ready for a no-deal Brexit if we have to do it and I stress again that's not where we intend to end up".
The six-page classified document, dated August 2, said customs checks meant the number of trucks crossing the main freight route between Calais and Dover would drop by between 40% and 60% within a day of a no-deal Brexit, with disruptions lasting up to three months.
Speaking to BBC Radio 4's Today Programme, the leader of the overseas British territory claimed he had been fully communicating with Boris Johnson's Government on the eventuality of a no deal Brexit since he came into power.
The UK government dismissed the importance of the Operation Yellowhammer report, saying that the document "was never a base or central case".
The stark picture of disruption represents the government's "reasonable worst case scenario" for leaving the European Union on October 31 without a divorce agreement The government was forced to publish the document late Wednesday after lawmakers demanded it.
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Defense Secretary Ben Wallace said Thursday that "we are spending the money on doing lots of things to mitigate those assumptions".
The Yellowhammer document start with the analysis that "public and business readiness for a no-deal will remain at a low level, and will decrease to lower levels, because the absence of a clear vision on the form of EU exit (customs union, no-deal, etc) does not provide a concrete situation for third parties to prepare for".
Then on Tuesday Johnson suspended Parliament for five weeks until October 14, sparking outrage among legislators and several legal challenges.
A Scottish court ruled on Wednesday that the suspension was unlawful, prompting calls for lawmakers to return to work.
But the judge, in his written ruling, judge said: "I consider the characterisation of the subject matter of these proceedings as inherently and unmistakably political to be beyond plausible dispute". The cases go to the Supreme Court for a final ruling next week.
Johnson insists he suspended Parliament so that he can launch a fresh domestic agenda at a new session next month. He said he had "absolutely not" misled the queen - whose formal approval was needed to suspend Parliament - about his motives.
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But he lost his parliamentary majority last week after a series of defections and expulsions from his governing Conservative Party amid opposition to his strident Brexit stance.
- The analysis indicates that the aim of avoiding a hard border in Northern Ireland may be "unsustainable".
"We call on the United Kingdom government to immediately step up engagement with us on preparations - worryingly we have had less involvement with the Johnson government than under his predecessor".
"Virtually all of the assembled evidence belongs to the world of politics, both national and supra-national", he said.
Johnson said Thursday he was "working very hard" to strike a new deal with the bloc after the agreement made by his predecessor Theresa May was rejected three times by Britain's Parliament. "The UK has not proposed any alternatives and anything that has been legally credible and workable", European Parliament president David Sassoli said yesterday.
"Even if we are ready for a no-deal Brexit, this is highly disruptive and costly".
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