Northern Ireland is edging towards recession, the Confederation of British Industry has warned as Theresa May arrives in Belfast for her first visit to the Irish border.

The CBI said the political vacuum left by the collapse of power-sharing in Stormont along with Brexit uncertainty were taking their toll in the region, which is already the poorest performing of the 12 UK regions.

It said the latest figures from the Northern Ireland composite economic index showed “worrying levels of economic contraction” with two consecutive declines.

“The region looks to be on the brink of recessionary territory,” said the CBI Northern Ireland director, Angela McGowan.

Theresa May arrived in Northern Ireland on Thursday afternoon for a trip to a border town in County Fermanagh, hosted by Arlene Foster, the Democratic Unionist party leader.

Foster said the visit “will enable Mrs May to speak with people who live, work and travel across the much talked about Irish border on a daily basis. She will hear first-hand examples of how people see both challenges and opportunities for their sectors as we leave the European Union.”

May’s visit follows sustained criticism over her failure to visit the border, unlike the EU’s Brexit negotiator, Michel Barnier, who has visited it twice.

There is deepening concern in Ireland that the turmoil in Westminster this week is a sign the Conservative party will be unable to deliver any Brexit deal, raising the prospect of chaos on the Irish border next April.

There is also concern that May is “backsliding” on a promise of a legally binding guarantee that there will be regulatory alignment north and south of the border in the event of a no-deal Brexit.

On Wednesday night the taoiseach, Leo Varadkar, said Ireland was looking to hire about 1,000 officials for customs, veterinary and export checks to cope with a no deal.

He said the instability in Westminster meant there was no guarantee that a withdrawal agreement, even if agreed in Brussels, would get passed in London.

The EU moved to calm Irish fears over the consequences of a no deal. Under EU law Ireland would be legally required to perform customs checks and sanitary and phytosanitary checks at the border to protect public health, trading standards and revenues.

Varadkar has said he has received reassurances from the EU that it would not force physical checks at the border even if the UK crashed out of the bloc.

At the Irish border, business leaders have expressed concern that any division, even as a result of a soft Brexit, would have consequences.

“Almost the entire business community in Northern Ireland is opposed to Brexit,” Conor Patterson, the chief executive of the Newry and Mourne Cooperative and Enterprise Agency, said on Thursday.

“They are at one because they know that international collaboration with states that are its closest neighbours – that’s the Republic of Ireland and Britain – is the way to succeed in a modern economy.”

He said Newry had boomed as a result of the “peace dividend”, with major employers including Norbrook, a veterinary pharmaceuticals firm with a workforce of 2,000, the financial services firm First Derivatives employing 2,500, and the cruise liner refurbishment firm MJM, which is revitalising the Harland & Wolff shipyard in Belfast.

“Newry will be resilient to Brexit but my worry is that other communities in Northern Ireland will be less well placed to adapt to the shock,” said Patterson.

May is scheduled to meet the Federation of Small Businesses in Belfast on Friday. Roger Pollen, its head of external affairs in Northern Ireland, said businesses would adapt to whatever new rules Brexit threw up but investment and planning decisions were not on pause.