Appearing on a stage with other key Brexit figures, including Jacob Rees-Mogg and Gina Miller, the leading Tory rebel said “ordinary life will grind to a halt” if the talks are still deadlocked as D-Day nears.
The warning came as Mr Rees-Mogg launched his most outspoken attack yet on big businesses opposing a hard Brexit, claiming they have “got everything wrong in the whole of their history”.
Andrea Leadsom, the Commons leader, suggested she would not accept any further “compromises” beyond the deal struck at Chequers by Theresa May – preferring a no-deal outcome.
And, at the event in central London, Labour’s Chuka Umunna urged his party not to “lie to our voters” by claiming that leaving the EU could ease concerns in immigration, when a “different model of capitalism” was needed.
The one-time leadership candidate also appeared to have ruled himself out of a future race, with Labour in Jeremy Corbyn’s iron grip, saying: “I’m not sure the Labour party would have me to be quite frank!”
Last month, Mr Grieve, a former attorney general, led an aborted revolt to guarantee MPs a “meaningful vote” to prevent Britain crashing out of the EU without an agreement.
In his most dramatic language yet, to underline the high stakes, Mr Grieve told the audience: “If by the end of February or early March it is clear that there is no deal on anything, there will be a declaration of a state of emergency in this country.
“Actually, ordinary life will grind to a halt. That is the extent to which our lives are intermeshed with the lives of our European partners, and that is what will happen if there is no deal on anything.”
Mr Grieve said hardline anti-Brexit MPs had “abdicated” their responsibilities to the public by boasting that they will do “absolutely nothing while we skated off the edge of the cliff into this major national crisis”.
“That is the madness that has crept into some of the discourse in parliament,” he added.
Meanwhile, Ms Leadsom refused to be drawn on whether she had contemplating resigning over the Chequers plan – as Boris Johnson and David Davis later did.
“I won’t comment on what happened at Chequers – that was a cabinet meeting,” the Commons leader said.
But hinting any further concessions would be unacceptable, she said: “I will be looking at whether our red lines have been breached.”
Insisting what was important was that the EU knew the no-deal threat was real, Ms Leadsom said: “We will be prepared to consider leaving without a deal.”
Meanwhile, Mr Rees-Mogg attacked “vested interests” that were colouring the views of big businesses that wanted to protect themselves from tariffs on their goods.
Asked about their warnings on Brexit, he said: “By the business community, you mean the EU-funded CBI [Confederation of British Industry].
“They’ve got everything wrong in the whole of their history – I wouldn’t take any notice of them.”
Pressed on BMW’s stance, he added: “BMW doesn’t want 10 per cent tariffs applied to BMW cars coming into the UK.
“The UK is the biggest market for German-made cars – it’s 50 per cent bigger than the American market, and the German companies had a profit warning when tariffs were threatened on the Chinese market, which is their third market.
“There’s huge vested interest from the German car manufacturers in keeping us in the European Union, which inevitably colours their view and their decision-making.”
Mr Umunna, when asked if he would seek his party leadership when Mr Corbyn’s time was up, replied: “Well he’s probably not going to be there in 100 years.
“I think it is unlikely to be happening any time soon, and certainly not before the date of departure from the European Union.”
Mr Umunna added: “Not at the moment no. It’s less a question of whether I fancy a crack at it – I’m not sure the Labour party would have me, to be quite frank.”