Business and political leaders in Northern Ireland have labelled Boris Johnson’s Brexit plan a “disaster” which could wreck the economy and the Good Friday agreement.

They condemned the proposals, unveiled on Wednesday, as a betrayal of previous government commitments to protect trade and avoid a hard border between Northern Ireland and the Irish Republic.

The prime minister’s plan, which Downing Street submitted to Brussels after Johnson’s speech at the Conservative party conference, would create two de facto frontiers in the form of a “regulatory border” down the Irish Sea and also customs checks between Ireland and Northern Ireland.

The Democratic Unionist party endorsed the plan as a “basis” for the EU to engage with the government, without risking the UK’s internal market. The DUP welcomed the proposals for ensuring Northern Ireland “would be out of the EU customs union and the single market as with the rest of the United Kingdom”.

A spokesperson added that the proposals respected the spirit and principles of the Good Friday agreement.

Others in Northern Ireland, however, warned of grave economic and political consequences. Sinn Féin called the plan “an act of political sabotage” for the region. Sinn Féin’s vice-president, Michelle O’Neill, said her party could not accept a DUP veto on extending the arrangement in a potential vote in 2025.

“There can be no situation whatsoever when the DUP are going to be afforded a veto, a lock, a blocking mechanism of any form in which to thwart any progress that could potentially be made on Brexit between both the EU and the British government,” she said.

The Social Democratic and Labour party leader, Colum Eastwood, described Johnson’s plan as “dead on arrival”.

Glyn Robert, the head of Retail NI, said the proposal would lead to north-to-south tariffs with “huge negative impacts” on farmers and the agri-food sector. “It would also mean two borders requiring renewal after four years, surveillance in border communities without their consent and checks north-south and west-east.”

Other business groups echoed the alarm. “All the promises of unfettered access have been abandoned ... NI is a small business economy and this is a death knell for some of those businesses,” Tina McKenzie, chair of the Federation of Small Businesses for Northern Ireland, told Sky.

Aodhán Connolly, director of the Northern Ireland Retail Consortium, said the proposals seemed to shred a joint UK-EU pledge in 2017 to keep a frictionless border.

“This will lead to complexity, delays, tariffs, VAT and cost rises that will make NI goods less competitive and squeeze our household budgets. The measures are predicated on intrusive surveillance which will put a burden on business and be disruptive for border communities. In short these proposals are unworkable and unpalatable,” he said.

Manufacturing Northern Ireland, an advocacy group, warned in a tweet: “The Boris plan unveiled today ... also means surveillance in border communities without their consent, checks N/S and W/E, no exemptions, no market access and import VAT. #disaster.”

The DUP stood isolated in endorsing the plan as an alternative to the backstop. The DUP leader, Arlene Foster, urged the EU to take the offer seriously – risking a backlash from business owners and farmers, who traditionally support the party.

The DUP leader, Arlene Foster, backed Boris Johnson’s plan for leaving the customs union. Photograph: James Veysey/Rex/Shutterstock

Johnson’s plan, which he termed a “fair and reasonable compromise”, involves the the UK leaving the EU on 31 October with a transition period as originally envisaged until the end of December 2020, but with the vexed issue of the Irish border being solved by a specific proposal for Northern Ireland.

Northern Ireland would remain in regulatory alignment with the EU until 2025 but emerge from the customs union with the rest of the UK. It proposes that at the end of 2025 Northern Ireland in conjunction with Ireland would decide on the level of regulatory alignment through a Belfast-Dublin “bilateral lock” in a British-Irish ministerial council. This would mean customs checks between Northern Ireland and the Republic from 1 January 2021, which is anathema to Dublin and DUP’s rivals in Northern Ireland.

“What I have heard from Boris Johnson today is more bluster,” said Michelle O’Neill, Sinn Féin’s leader in Northern Ireland. “He is playing to the gallery of Tory party and playing fast and loose with Good Friday agreement.”

The proposal did not respect Northern Ireland’s complexities, interdependent economy and society, said the Alliance party leader, Naomi Long. The MEP doubted the Stormont assembly, which collapsed in 2017, could be revived and decide whether to continue alignment with EU single market regulations or to align with Britain.

“It would not only be unworkable, but would place any chance to get the assembly up and running in complete jeopardy. There is simply no chance of any of this actually happening … these are farcical proposals and in no way serious,” Long said.

Non-DUP unionists, in contrast, worried that Johnson’s plan would tie Northern Ireland to EU regulations, even if temporarily, while the rest of the UK went its own way. “In essence, Northern Ireland will be in a different relationship with the EU to the rest of the UK,” said Lord Empey, of the Ulster Unionist party.

Jamie Bryson, a loyalist blogger, accused the DUP of betrayal. “An economic united Ireland is unacceptable for even one day, let alone until 2025 as part of a ‘conditioning’ phase for permanent economic unity. Utterly shameful.”