Britain’s handling of immigration has created a “serious disconnect” between the nation’s “elites” and mainstream public opinion, Australia outgoing high commissioner to the UK has warned.

In a valedictory address to the Policy Exchange think tank in London, Alexander Downer said there was a “near obsession with identity politics” – at expense of helping migrants to integrate into UK society – which “grated” with much of the population.

During his four years in the country, Mr Downer said he had found the British were very accepting of people of all races and religions, but questioned whether the elite fully understood the “great pride” that existed in its traditions and institutions.

In a wide-ranging speech, he said Britain should have confidence its ability to negotiate new trade deals after Brexit, opening up access to the fastest growing markets in the world.

He also took a thinly-veiled sideswipe at Jeremy Corbyn, saying politicians who promised to spend “bucketloads of money” solving social problems without explaining where it came from “wouldn’t pass muster in Australia”.

Mr Downer, a former Liberal Party leader and foreign minister, acknowledged the preoccupation with identity politics was driven by the “laudable objective” of rectifying inequalities, but said it may have been wiser to do so in a more consensual manner.

“My travels around the UK made me wonder whether there wasn’t some kind of serious disconnect between the opinions of the mainstream of British society and the elites who dominated the nation’s major institutions – the Parliament, the Civil Service, the BBC, the media, academia and even parts of the professions,” he said.

“Contrary to the views of many in the commentariat, the British are very accepting of people of all races and religions. But it is not entirely clear to me that the elite understand that in Britain there is great pride in the country’s traditions and institutions.

“What seems to have happened in Britain, as in other English speaking countries, is that generations of leaders have played down the country’s national identity and replaced it with a near obsession with identity politics.

“Instead of building on an existing national identity by working to integrate migrants into the mainstream of society, the elite have salami-sliced society with an ideology of identity politics.”

On Brexit, Mr Downer said the UK was better off outside the customs union as remaining a member would mean trade policy would continue to be set in Brussels without any say for British politicians.

“It would be humiliating for a once great country to end up by being little more than a dependency of the European Union,” he said.

He sought to highlight the opportunities offered by leaving the EU, saying a trade free deal with Australia would “plug the UK into the fastest growing markets in the world”.

“Because the UK hasn’t negotiated trade agreements for many years, there is a distinct lack of national self-confidence particularly in the media about Britain’s capacity to negotiate trade agreements,” he said.

“I don’t think you should be without confidence. This is something you can do and do relatively easily provided you yourselves wish to open your markets to the outside world.”

In a clear swipe at Labour, Mr Downer said calling for more government expenditure funded through ever-growing debt “does not really constitute an economic policy”.

“Claiming that a few rich people are going to provide enough money through higher taxes to finance massive infrastructure projects, a stronger health system, free university education, higher pensions – and so the list goes on – just wouldn’t pass muster in Australia,” he said.