We describe high spectral resolution, high dynamic range integral field spectroscopy of IC418 covering the spectral range 3300-8950Å and compare with earlier data. We determine line fluxes, derive chemical abundances, provide a spectrum of the central star, and determine the shape of the nebular continuum. Using photoionisation models, we derive the reddening function from the nebular continuum and recombination lines. The nebula has a very high inner ionisation parameter. Consequently, radiation pressure dominates the gas pressure and dust absorbs a large fraction of ionising photons. Radiation pressure induces increasing density with radius. From a photoionisation analysis we derive central star parameters; log T ef f = 4.525K, log L * /L = 4.029, log g = 3.5 and using stellar evolutionary models we estimate an initial mass of 2.5 < M/M < 3.0. The inner filamentary shell is shocked by the rapidly increasing stellar wind ram pressure, and we model this as an externally photoionised shock. In addition, a shock is driven into the pre-existing Asymptotic Giant Branch stellar wind by the strong D-Type ionisation front developed at the outer boundary of the nebula. From the dynamics of the inner mass-loss bubble, and from stellar evolutionary models we infer that the nebula became ionised in the last 100 − 200 yr, but evolved structurally during the ∼ 2000 yr since the central star evolved off the AGB. The estimated current mass loss rate (Ṁ = 3.8 × 10 −8 M yr −1 ) and terminal velocity (v ∞ ∼ 450 km/s) is sufficient to excite the inner mass-loss bubble. While on the AGB, the central star lost mass atṀ = 2.1 × 10 −5 M yr −1 with outflow velocity ∼ 14 km/s.