Taoiseach Micheál Martin believes a "landing zone" is emerging for a free trade deal between the EU and the UK after Brexit.
Speaking after his first meeting with UK prime minister Boris Johnson, the Taoiseach said there is a will on both sides to reach an agreement as the Brexit deadline fast approaches.
"I think where there's a will, there's a way. It seems to me that there is a landing zone if that will is there on both sides, and I think it is," Mr Martin said.
"My own gut instinct is that there's a shared understanding that we don't need another shock to the economic system that a no-deal Brexit would give, or a sub-optimal trade deal would give, to our respective economies."
Mr Martin said he and Mr Johnson agreed it is "absolutely essential" that a free trade agreement be reached between the EU and UK.
The Taoiseach said Ireland and the UK must develop a strong relationship after Brexit and invest in shared projects on the island of Ireland.
"The last thing we all need now is a second significant systemic shock to our systems, to our economic systems, and that's what a no-deal Brexit would present on top of or alongside Covid," Mr Martin said.
"So I did take from that a genuine view that a comprehensive free trade agreement was in the best interest of all concerned, and that the British government was sincerely seeking such an outcome."
The two leaders met in Hillsborough Castle, Co Down, for the first time, after a meeting planned for last week was cancelled due to the death of former SDLP leader John Hume.
Speaking ahead of their meeting, Mr Johnson said he wanted to develop relationships "all sorts of ways - east-west, north-south - you name it".
"I had the honour of meeting the Taoiseach several years ago," Mr Johnson said.
"I am very pleased to develop our friendship and relationship now."
Mr Martin and Mr Johnson had a detailed discussion on Brexit, the Covid-19 pandemic and UK government plans to celebrate 100 years since the creation of Northern Ireland.
Before he arrived, Mr Johnson announced plans to establish a Centenary Forum and Centenary Historical Advisory Panel to work alongside his government to mark the centenary.
Mr Martin said he has never been an advocate for partition, but said people can learn from the comm- emorations of Northern Ireland.
"No one party owns history, no one political party does, no one tradition does," Mr Martin said.
"The challenge for us really is can we organise centenary commemorations in a way that is as inclusive as possible, as respectful as possible of different traditions, but done in a way that brings new insights into what actually transpired 100 years ago.
"That's the spirit within which I and, I think, the British prime minister wholeheartedly agreed.
"That's the spirit within which we should proceed and create a new shared understanding of how we've got to where we've got to today, 100 years on."