The departing Irish ambassador to the UK has expressed his personal “sadness” that Brexit is threatening to reverse decades of improving relations since peace was established 20 years ago. Dan Mulhall said the border checks between the Republic of Ireland and Northern Ireland were a non-starter and that Ireland’s “hope” was that Britain would remain in the customs union.

He made his remarks in a wide-ranging interview in the week that a political row broke out between the new Irish taoiseach and the Democratic Unionist party, who have said they will not countenance the border being moved to airports and ports. Such a move would require British citizens in Ireland to show passports before boarding internal UK flights to Manchester or London.

Mulhall said that all sides needed to abandon enmities and needed to be “willing to do things that maybe they wouldn’t ideally want to do”, because no one, including the DUP, has said they want a hard border in Ireland.

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Mulhall said Irish-British relations had been neglected in the referendum, but now needed to be part of the calculation because of the risk to peace and to trading relations. “It’s not acceptable to have a border on the island of Ireland because it would be economically disruptive and politically risky,” he said.

“You can’t have a border, it’s not practical. It’s a 300-mile border. It has no geographical basis – it’s not like the river Rhine is running along the border. It’s got hundreds of crossing points. It’s just not feasible to have a border. So you don’t try to do what you can’t do. We have to work out what it [the solution] is,” he said.

Last week, Ireland’s new taoiseach, Leo Varadkar, prompted a war of words when he declared that he would not “design a border for the Brexiteers”. The Dublin administration is unconvinced by the UK’s plans to use technology to maintain the invisible land border between Northern Ireland and the Republic, which will become a boundary between Britain and the EU after Brexit.

Mulhall said the ideal solution was for the UK to remain in the customs union, obviating the need for customs checks. He believes Britain is only now realising the complexity of unravelling 44 years of public policy, and that both sides now face the “grind … [of] trying to bring these negotiations across the line in the next year and a half in a way that will avoid doing serious damage to Ireland, to British-Irish relations, and to the UK”.

“[We will devote] great determination and energy to achiev[ing] this goal, because it is not straightforward,” Mulhall added.

He described Brexit as a “black swan event” that had produced the “only dark cloud” on Ireland’s horizon, giving the country its “biggest economic, political and diplomatic challenge in the history of the state”. Irish exports to the UK have already taken a €500m hit because of the decline in sterling, and a hard Brexit would threaten relations further.

I feel a degree of sadness that I have had to witness this during the latter part of what has been a very exciting and enjoyable posting”

“We’ve already taken a degree of pain from Brexit – this is why I feel so sad – and to some extend, discomfited, because it has come at a time when our relationship was at a peak of satisfaction and friendship,” Mulhall said. “I feel a degree of sadness personally that I have had to witness this during the latter part of what has been a very exciting and enjoyable posting [in London].”

He predicts that deals can be done only when all political sides are ready to find a solution: “The negotiation process involves finding that magic space where both sides can feel their interests are covered.”

On future relations between the UK and the EU, he forecast that remaining in the customs union was an option because Theresa May’s remarks on this issues were “nuanced” in her Lancaster House speech. This is what Ireland will be pushing for, because that would also mean no tariffs on the €50bn annual trade between the republic and Britain, which includes sale in both directions of agrifood, pharmaceuticals and services.

“Our first hope would be … a decision on part of the British government to remain in the customs union or something akin to the customs union,” said Mulhall. He said it could be a tailor-made “special arrangement between the UK and the EU on customs.”

Mulhall, who has been posted to Washington, also dismisses the fears of some business leaders that the UK will become “a Singapore” which would try to lure business from Europe with a low-tax regime. That, he said, would be “contentious” and make it “next to impossible to secure access to EU markets”.