Ireland has done the right thing by establishing a corporate tax rate of 12.5 per cent, according to US business magazine publisher Steve Forbes.

Speaking in Stockholm yesterday, he suggested that, rather than trying to harmonise rates at a higher level, other western European nations should follow the Irish example.

"The Irish have got it right," said Mr Forbes. He credited structural changes and changes in employment law and taxes which began in the early 1970s as the key to turning around the Irish economy.

"Thirty years ago Ireland was the poorest economy in western Europe - it had been for centuries. Ireland aggressively stoked foreign investment and gave out tax holidays like it was throwing around confetti."

Governments in eastern and central Europe were now looking to Ireland as an example of how to move ahead, he said. "As a result, they are putting in place tax structures that encourage growth rather than discourage growth."

Mr Forbes has twice sought the Republican Party nomination for US president, primarily campaigning on a flat-tax platform and he also wrote a book on the topic.

With his usual no-nonsense approach, he suggested that following the "troubled history" between Ireland and its nearest neighbour, Ireland had achieved the best revenge on Britain with its economic success.

"Today Ireland's per capita income is higher then Britain, Germany and France and they did it within the space of two generations."

Mr Forbes made the comments at a conference in the Swedish capital organised by US software company SAS.

Last August, Elevation Partners, a private equity fund in which U2 singer Bono is one of six partners, invested a reported $300 million (€222 million) for a 40 per cent stake in Forbes media. Touching on that investment he said: "We get free CDs."