The United Kingdom is, and most likely will remain, both Ireland's largest trading partner and biggest competitor for mobile private investment.

Once the initial shock of Brexit subsides it will be clear that Ireland’s interests can best be served be ensuring the UK continues to have access to the single market.

There will also need to be some control on migration as part of that deal: most likely mediated through limiting entitlement to welfare as set out in the rejected UK referendum.

Given the long-standing connection between the UK’s and Ireland’s societies and labour markets, retaining the principle of the free movement of people between the two islands is paramount.

While our unique relationship with the UK is deeper than just economic – particularly given the entwined business relationships with Northern Ireland – the Irish Government must keep the trade opportunities and investment challenges front and centre in the upcoming negotiations on the new arrangement for Britain with the EU.

Our relationship with the UK is strong and mutually beneficial. As Ibec pointed out in The Irish Times back in November 2013, we need to build that relationship by both collaborating and competing.

Being in the EU together means we are on the same team – it’s just that we are competing for the best positions.

The UK being outside the EU may have some limited positive substitution effects for Ireland, but the negative income effects of an underachieving neighbour would far outweigh them.

Many of the concerns raised in the Brexit debate around the future direction of the EU resonate here and elsewhere in Europe.

We have a shared interest in a more open, more competitive EU, better equipped to face the next wave of global economic challenges.

However, the negotiating challenge for our Government now is to ensure the best deal possible for the UK while ensuring the UK does not steal a march to Ireland’s disadvantage.

Now is a time for stable government, and its role has to be to do everything within its control to mitigate the cost of the UK vote to leave and to actively contribute to domestic stability.

At a minimum, this can be done through a do-no-harm approach, with a commitment that business will not face any regulatory, labour cost or tax increases. This is not a “do nothing” approach, as we need the Government to be ambitious for public investment, including seeking latitude to remove necessary capital spending from the EU fiscal rules.

Enterprise measures

The Government has the ability to set new policy so that Ireland remains competitive for what will be contestable business. Enterprise tax measures will be needed to safeguard Ireland’s relative tax competitiveness against the UK.

For some time, a radical reform of the tax code to champion entrepreneurship, boost job creation and attract the next wave of foreign investment has been well underway in the UK.

It is inevitable that our neighbour will continue to edge forward with the introduction of further measures to retain business investment. Ireland must aggressively compete, particularly on tax changes targeted at attracting Irish-owned firms to relocate operations to the UK in order to serve that domestic market.

As the UK becomes ever more aggressive on corporate tax competition, Ireland must not leave the wide gaps in our marginal personal income rates, capital gains and treatment of share options that can sway mobile capital and talent.

However, we should continue to be optimistic about future growth prospects, and despite the economic challenges posed by Brexit, we must continue to plan and invest ambitiously for the future.

While the shock to economic confidence in the UK and globally is likely to impact negatively on Irish economic growth over the coming quarters, it is far too early to estimate how significant the growth impact will be.

GDP growth in 2016 will most likely remain very strong (above 4 per cent) but there is clearly now greater uncertainty on any 2017 forecasts. The Government must preserve the capital budget, irrespective of any downward revisions to economic growth and the fiscal space, and the EU will need to support flexibility in the fiscal rules.

Increased investment is another opportunity to send more than a message of confidence and optimism to foreign investors, international money markets and domestic stakeholders.

There is a critical need for the current acrimony to give way to pragmatism so that a mutually beneficial arrangement between the EU and UK is reached.

We must appreciate the power that Ireland, as the EU member state most affected by a Brexit, can wield.

While the international context unfolds and new relationships are forged, Ireland’s interests must be formidably represented by our Government at the negotiating table.

Any deal at EU level should give special recognition to Ireland’s unique and historical trading, economic and political relationship with the UK. Danny McCoy is chief executive of Ibec