Britain should learn from Ireland's economic success, as well as from the Irish education system, according to the shadow chancellor of the exchequer, George Osborne.

Ireland and the UK had strong common interests in promoting greater competition in Europe, he said.

"Twenty-five years ago it would have been unthinkable for someone from the UK to come here to learn about economic policy," said Mr Osborne, who was in Dublin this week to give a lecture at the Smurfit School of Business in Dubin. "It's not just about the 12.5 per cent corporation tax rate. Other things have helped Ireland succeed. Having a highly skilled workforce is the thing that stands out for me and that's something that I will take back to Britain. Sadly our education system in the UK is not of the same standard as in Ireland."

Ireland and the UK had common economic interests in Europe which they should defend together, Mr Osborne said. "There's a lot that the Irish and British governments have in common in terms of a common agenda of driving through the Services Directive. I would also say that there is a common agenda between Britain, Ireland and countries in central and eastern Europe to prevent the drift towards tax harmonisation which again is gaining momentum in some European countries. In a world where capital and people can move anywhere, it's a good thing to encourage competition not just in the rates but also in tax regimes."

Addressing the issue of immigration in Europe, Mr Osborne said that moderation in the vocabulary of debate could contribute to the success of immigration policy here. "The general lesson from the issue of immigration in England is that it must be conducted in a reasonable way. It's very easy for the language to get out of control and to get inflammatory. You should also recognise the economic and cultural benefits of immigration and set them against the costs."

In a recent debate on Irish migration policy, Labour party leader Pat Rabitte aroused controversy by referring to the number of Polish people in Ireland when calling for the introduction of permits for workers from accession states. However, Mr Osborne added that immigrants needed to "sign up" to a minimum set of values in the country to which they were emigrating.

Mr Osbourne welcomed growing economic economic co-operation between Northern Ireland and the Republic. "Whether Northern Ireland could set a separate rate of corporation tax would be a very big issue, because at the moment sadly we don't have devolved institutions or policy making and even Scottish devolution has not allowed - beyond very narrow income tax powers - the Scottish parliament to set different rate of corporation tax. So it would be a big step".

Mr Osborne said that while the Conservative party continued to uphold the United Kingdom, it was adapting to devolution by giving its Scottish and Welsh elements more independence from London. "The Scottish conservative party now has its own leadership structure and addresses specifically Scottish issues."

Mr Osborne said that high levels of consumer debt had been posing a problem for the UK economy. "Generally the economy is very vulnerable to a consumer slowdown and to changes in interest rates that can impact on consumer spending. Hopefully we have been able to deal with the housing boom. There has been a slowing of house prices in recent months. What we're all aiming for is sustained and stable growth, rather than sudden spurts and sudden dips."