Simon Wolfson, the chief executive of Next and prominent leave campaigner, has warned the British economy will be “finished” if the government pursues an isolationist Brexit course.

The Conservative peer told the Press Association the referendum vote was about UK independence, not isolation, adding that Britain would set itself up for economic failure if it closed itself off from the rest of the world.

“I think the hard, soft Brexit language is unhelpful, and what we should be talking about is whether we have an ‘open’ or ‘closed’ Brexit,” he said on the sidelines of a press conference on Thursday.

“Britain voted for independence, it didn’t vote for isolation and so we have a choice: are we going to choose to build an open, global-facing economy, or one that’s closed and isolated? If we choose the latter, then our economy is finished. If we choose the former, we stand a chance of flourishing greatly.”

Theresa May’s government has indicated it will embark on a so-called hard Brexit by introducing migration curbs and stopping the free movement of EU citizens into Britain. EU leaders have stressed that free movement is a condition for accessing the single market.

Lord Wolfson made the comments shortly after announcing that the £250,000 Wolfson economics prize would be awarded to the best solution for funding and overhauling the UK’s road network.

Against a backdrop of deep cuts to transport budgets at national and local levels, the prize seeks ideas to bring more investment “and a better deal for road users”.

Wolfson, sponsor of the prize, said he wanted entries to embrace the latest digital technologies, new forms of power for cars and lorries and self-driving vehicles.

He said Brexit was an opportunity to break from old ways of thinking that prevented new roads being built and existing ones being upgraded. “One of the things that becomes very clear when you look at the challenges our economy will face as we go into Brexit is that we need new ideas to stimulate growth in the UK,” Wolfson said.

“Structural reform of our roads is one such idea that could generate an enormous amount of economic growth, which could compensate for some of the inevitable economic shock as we exit the EU.”

Rejecting concerns that the emphasis would be just on cars and lorries, he said public transport must also be integrated into any plans along with the needs of cyclists.

He said the judges expected universities and policymakers from the UK, US, China and across Europe to come up with ideas that answer the question: “How can we pay for better, safer, more reliable roads in a way that is fair to road users and good for the economy and the environment?”

Sir John Kingman, the chairman of Legal & General and the chair of the judging panel, said the Treasury was under pressure to halt a decline in income from road users while at the same time bolster spending on the roads.

He said the Treasury received £33bn from road users in fuel tax and excise duties and “would be very interested in ideas in this area” to stop the decline.

Wolfson warned that Britain’s roads were in desperate need of investment, which was not so much about a new motorway or upgrade, but thousands of smaller initiatives to bring the network into the 21st century.

Kingman, who was a senior official at the Treasury before joining L&G, said Britain’s record of investment was weak in recent years, partly due to protests from special interest groups.

“We have a problem because we are a crowded island, but we shouldn’t be defeatist about this. We have cracked many problems in the past,” he said. “We are particularly interested in how new technologies can address these issues and convince the public that it is possible. This is not a prize just for innovative ideas but ones that are workable and can be sold to the public.”

The contest is free to enter and open to anyone. It is sponsored by the Charles Wolfson Charitable Trust and managed by Policy Exchange, the free market thinktank.

The deadline for submissions is Thursday 2 March 2017. A shortlist will be announced in April and the prize will be awarded at a ceremony in July.

Judges include Alistair Darling, a former chancellor of the exchequer, Isabel Dedring, a former London deputy mayor for transport, and Bridget Rosewell, a former chief economist to the Greater London Authority and founder of the Volterra Partners consultancy.