MONETARY union will be good for jobs, European Commissioner Mr Yves Thibault de Silguy insisted yesterday. He also warned that any delay could derail the entire project.

Calling Ireland the "best pupil in Europe", he said it was expected to become one of the founding members of the euro.

Speaking to the Institute of European Affairs, Mr de Silguy insisted it was a myth that monetary union would be bad for jobs.

Reducing public deficits would release savings for investment, growth and hence jobs, he said. The end of currency fluctuations would also mean no return to the days of currency crises. According to Mr de Silguy, the last crisis cost Europe two percentage points in growth and 1.5 million jobs.

He added that the euro would be a stable international currency which would offer savers across the world an alternative to the dollar. "Savings will flow into Europe to create jobs."

Speaking earlier to the Oireachtas Finance and General Affairs Committee, Mr de Silguy said he felt a "common taxation system" across Europe would benefit European economies. "It is better to have agreement on a tax system than to have competition between states," Mr de Silguy said.

He also warned that any delay to the EMU timetable could derail the whole project. It would be "impossible to delay as this would have drastic economic and political consequences", the Commissioner warned.

Any change would require a renegotiation of the Maastricht Treaty. "If you change the treaty on one point it is difficult to avoid discussion on the other points like the criteria," he said. "Such a debate would likely spell the end of the single currency.

Failure to achieve monetary union would also put the Inter governmental Conference and enlargement towards eastern Europe at risk and would have serious economic consequences, according to Mr de Silguy.

"Announcing a delay would put governments under tremendous pressure to relax budgetary consolidation efforts, leading to higher interest rates, lower growth and higher unemployment", he warned.

Mr de Silguy also told the committee that he expected European finance ministers and central bankers to reach a "broad consensus" on a stability pact. The emphasis of any such pact, which will ensure that countries continue to keep their budgets in order after monetary union, should be on deterrence rather than on penalties after the event.