The government's determination to close Brexit negotiations within two years risks unnecessary harm to both businesses and the wider economy, Khan said.
In a formal response to the government's Brexit white paper, Khan has called on May to avoid uncertainty over a potential “cliff edge” and reassure firms that a plan is in place to avoid an immediate switch to World Trade Organisation default trade rules if negotiations overrun.
May has claimed that “no deal is better than a bad deal” on Brexit, but the London mayor said this underestimates the “colossal damage” such a move could have on the UK economy.
“The tariffs and barriers that this would place in the way of businesses would inevitably restrict trade with their largest market and significantly damage both London’s and the UK’s economy,” Khan said.
“This would be the worst-case scenario for business.”
It comes with Khan scheduled to give evidence to parliament's Brexit select committee on Tuesday morning on the UK's negotiating objectives.
The London mayor will also use the opportunity to push back against suggestions that Westminster could cut taxes in a bid to remain competitive if offered a bad deal by Europe.
“Starting a race to the bottom would inevitably bring about a decline in our country’s prosperity and world standing,” Khan said.