But the Government will have to invest more heavily in the Foreign and Commonwealth Office and ensure Britain remains “an attractive, inclusive society, with a competitive economy and a stable political and business environment that attracts investment”.
Sir Simon, permanent under-secretary at the FCO until 2015, said: “We will continue to be a significant international player and an important economy.
“We have a strong history of diplomacy, projection of military force and development spending.
“The question is how do we maximise them? There is no point in being pessimistic. We must be realistic and clear-eyed and take the opportunity to think afresh.
“The Brexit referendum contained one strand of thought which seemed to be defensive and insular and another that said this is an opportunity to be global and outgoing.”
His comments follow his appointment as honorary president to the British Foreign Policy Group, a think tank committed to promoting a more engaged national debate.
He said: “We still have a soft power because of our language and institutions. It may have taken a bit of a knock… but when we sort ourselves out and get clarity, those core aspects will remain.
“If we’re smart we will be able to create new opportunities to broker things between he Americans and Europeans in different ways.”