Gordon Brown was always expected to reshuffle his cabinet this week, but Friday’s series of chessboard moves were more dramatic than any commentators were predicting.

The most interesting shift is that of Peter Mandelson, the EU trade commissioner, back to Britain to take on the role of business secretary in the cabinet, probably with a focus on managing the fallout from the economic crisis.

Mandelson was for years an arch-enemy of Brown’s in former Prime Minister Tony Blair’s cabinet. The two rarely saw eye-to-eye and Brown’s deputies were open in making clear their dislike of Mandelson’s rival power-base to Brown’s at the Treasury.

A devoted-Blairite, Mandelson was dubbed the “Prince of Darkness” for his behind-the-scenes manoeuvring.

Brown’s decision to bring him back into government probably reflects several things: one, an acknowledgement that Mandelson is a skilled, confident politician who can get the job done. At a time of crisis, it says “better to bury the hatchet and get the best people on board” rather than keeping him isolated because of long-held grudges.

It also may reflect a desire to bring someone who is close to the levers of power in Brussels and the European Union back into the fold so that Britain is better positioned to handle its European ties at a time of global crisis, while also maintaining its close coordination with the United States.

The risk for Brown is that Mandelson ends up becoming an alternative power centre within the cabinet again. In many respects he outranks every other member of the cabinet for skills and experience.

That strength may damp down those — like Foreign Secretary David Miliband or Justice Secretary Jack Straw — who have been mentioned as possible challengers to Brown, but it may also mean that Mandelson is there to enter the fray should Brown’s position as prime minister ever be formally challenged.

Other elements of the re-shuffle were also of note. Margaret Beckett, a former foreign secretary and long-time Labour stalwart, is also brought back into the cabinet, another move that smacks of Brown wanting to surround himself with experienced, older faces rather than the new guard that has emerged over his past 16 months in office. She is expected to play a role as cabinet enforcer.

Another interesting move was the promotion of John Hutton, another Blairite, to run the Defence Ministry, sidelining Des Browne, a Scotsman and ally of the prime minister who is widely regarded by the military establishment to have been an ineffective defence secretary at a time when Britain is overstretched in Iraq and Afghanistan.

The details of the re-shuffle, expected to be formally set out later on Friday, are likely to be picked over for days. But the repurcussions of Mandelson’s elevation could last much longer than that.

Brown will be hoping they are positive rumblings, with Mandelson taking a tight hold of his portfolio in dealing with the economic crisis. But some in the cabinet — particularly long-term Brown-backers who always saw Mandelson as the enemy — may be quaking in their boots.