Tax harmonisation across Europe will be a fact of life within around 10 years, according to AIB's chairman, Mr Lochlann Quinn.

Addressing the national euro conference yesterday, Mr Quinn insisted that Ireland would have to compete on its own merits in the future and the primary focus must be on putting more resources into primary education.

"There will be a level playing field and Europe cannot follow us down as they have more complex social security systems and a pensions time bomb. Ireland has to prepare to play on that pitch."

Other problems for Ireland would include the lack of an EU Commissioner, a position which might only revolve to us every 10 or 12 years. He added that single currency regimes could be harsh.

Pointing to the difference in prosperity between the north and south of Italy and the "wasteland" in the corridor between Paris and Brussels, he said the reality was that populations would be required to move.

According to Mr Quinn, the timing of US foreign investment in Ireland was coincidental and there were few investments from German, French or Italians firms. "The levels of US investment cannot last forever," he warned.

He added that there would inevitably be large increases in wage levels in the State and, at the same time, the demise of many lower-skilled and lower-paid jobs.

"Not everyone will be able to fit that and education is the best way to target these people. Primary education is where we lose them and too many leave the system illiterate."