Business leaders have voiced fears that the extension to Brexit would create even more uncertainty for companies.

The extension to Article 50 agreed by Prime Minister Theresa May with fellow EU leaders removed the threat of a no-deal Brexit on Friday, but did not remove it as a potential outcome completely.

The Federation of Small Businesses said its members were being “driven to despair”.

Chairman Mike Cherry said: “Frankly, they are fed up of being made to pay the price for the political crisis that has engulfed Westminster.

“We have seen some cross-party engagement in recent days to try and end the stalemate. There should be no let-up in attempts to deliver the circuit breaker needed to secure a solution to this crisis.

“Extensions do avoid a cliff-edge in the short term, and dodging the economic harm of no deal at 11pm tomorrow will be a huge relief for many small businesses.

“What is a problem, however, is that these extensions provide no comfort that there will be an end to the debating, dithering and delay.”

Carolyn Fairbairn, the CBI’s director-general, said: “This new extension means that an imminent economic crisis has been averted, but it needs to mark a fresh start. More of the same will just mean more chaos this autumn.

“Businesses will today be adjusting their no-deal plans, not cancelling them.

“For the good of jobs and communities across the country, all political leaders must use the time well. Sincere cross-party collaboration must happen now to end this crisis.”

Dr Adam Marshall, director-general of the British Chambers of Commerce, said: “With less than 48 hours to go, the prospect of a messy and disorderly exit on Friday has again been averted. Businesses will be relieved, but their frustration with this seemingly endless political process is palpable.

“For most businesses, the ‘flextension’ agreed by the European Council will be preferable to deadlines that are repeatedly moved forward at the last possible moment.

“This extension buys Parliament some time to come to a consensus, but they can’t afford to squander it. Politicians must urgently agree on a way forward.

“It would be a disaster for business confidence and investment if a similar late-night drama is played out yet again in October.

“Our businesses and our communities need answers to plan for the future, and the Government must return its focus to pressing domestic issues, which have been ignored or marginalised for too long.”

Ian Wright, chief executive of the Food and Drink Federation, said: “Food and drink manufacturers are mightily relieved that the immediate threat of a catastrophic no-deal Brexit has been lifted. The additional time must now be used wisely.

“Government and Parliament simply must give us a coherent plan to lead us out of our current mess. It must be a way forward that allows us to make progress in resolving the future of our relationship with the EU, taking full account of the needs of food and drink businesses.”

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said: “While we’ve avoided a no-deal Brexit on Friday, it is utterly unacceptable that, more than two years since negotiations started, industry still does not know what the UK’s relationship with the EU will be in the coming weeks and months.

“Uncertainty has already caused serious damage – car plants are on enforced shutdown, investment has been cut and jobs lost. This cannot go on.

“Government and Parliament must use this extension purposefully to take no deal off the table for good, and guarantee a positive long-term resolution that delivers frictionless trade. If they fail, we face yet another devastating no deal precipice on October 31.”

Edwin Morgan, interim director-general of the Institute of Directors, said: “Confirmation of a further extension removes the immediate threat of no deal, but will bring little comfort for businesses when so much remains up in the air.

“Firms don’t want to see more of the same. They want to see politicians build consensus around a way forward that finally breaks the cycle of indecision.

“Westminster absolutely cannot feel the pressure is off now – quite the opposite: we need an increased sense of urgency towards finding a solution.”