Is powerful Mandy talking up the euro?

June 14, 2009

When Prime Minister Gordon Brown reshuffled his cabinet last week, fending off a challenge to his authority, a significant outcome was the creation of one of the most powerful ministerial jobs Britain has seen in years.

 

Peter Mandelson, a former European commissioner who has twice served in British governments in the past and twice been forced to resign, was reconfirmed as secretary of state for business, but also given greatly expanded authorities that make him a powerful if unofficial number two to Brown.

 

Much fun has been made of Mandelson’s new title, which because he has been elevated to the House of Lords in order to serve in the cabinet now officially reads as:

 

“Baron Mandelson of Foy in the county of Herefordshire and Hartlepool in the county of Durham, Lord President of the Council, First Secretary of State, and Secretary of State for Business, Innovation and Skills.”

 

But the length of the introduction aside, Mandelson’s new post puts him at the heart of tackling Britain’s worst recession in 60 years and planning for how the Labour government is going to rebound from a 20-point deficit in opinion polls to mount a challenge at the next election, due by June 2010.

 

Almost immediately it has also put pundits on watch about the possibility of Britain joining the European single currency, however unlikely that may be in the near term, since Mandelson is a committed European and euro-phile.

 

In comments in Germany last week, he described adopting the currency as “obviously” still an objective for the government.

 

“It is perfectly clear that the euro has been a great success in anchoring its eurozone members during this financial crisis,” Mandelson said after a speech in Berlin.

 

“Does it remain an important objective for Britain to find itself in the same currency as that single market in which it interacts? Obviously yes,” he said, adding: “That has to be a decision taken on the right terms, in the right circumstances and conditions, and therefore at a future time than we have now.”

 

Despite his hedging, bookmakers responded quickly to his comments, shortening the odds on Britain joining the euro before the end of the next parliament to 10/1.

 

“Europe and the single currency is always a divisive issue,” odds-maker Ladbrokes said. “But Lord Mandelson’s increasing power base means that it may again rise to the top of the political agenda.”

 

Surveys show that most of the British public does not favour giving up the pound for the euro, but many exporters and importers are keener on its adoption, which would neutralise exchange rate risks, even if it would also get rid of the comparative advantages sterling fluctuations can create. Almost 60 percent of Britain’s trade is with the European Union.

 

Brown and his predecessor Tony Blair always sidestepped the euro issue, but Mandelson’s newly influential role may allow him to nudge it back onto the agenda.

7 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

For the second time !!! Oh! Great Baron Mandelson of Foy give us our referendum boy.

NO doubt the euro-phobes will say that having the pound enabled the UK to devalue and emerge from the recession more quickly. But does ‘first out’ necessarily mean longer term prospects are better? We need to wait a little to see who actually emerges with greater economic strength. My bets are firmly on the eurozone! With the euro and ECB’s discipline, UK financial institutions wouldn’t have got us into such a deep mess in the first place and the UK now has a huge public deficit to repay, probably over decades. High taxes will be here to stay, no matter who is in government.

Posted by Adrian Fox | Report as abusive

The Prince of Darkness has just about enough naked ambition to satisfy even the most ardent unelected European bureaucrat, and bringing Britain into the euro would no doubt ingratiate him hugely with his European masters. Fortunately, however, the British people know that joining the eurozone would be a national disaster on a scale unprecedented in modern history, because it would constitute the final act in the total subjugation of this country to the monster the EU has become. We must all remain constantly on our guard against this menace. As for the euro, the strains that are already beginning to manifest themselves at the fringes of this “one size fits all straitjacket” will eventually bring about its destruction.

Posted by Matthew | Report as abusive

Mandelson is the true face of Socialism, an evil man with evil intent, emerging from behind the pretty face and soothing words of the Blair years to reveal it as the cynical sham it always was. Regardless of setbacks and diversions, the long term aim of Mandelson and his party is nothing less than the breakup of the UK and delivery of its component parts to the new Socialist empire of the EU.

Posted by Jason | Report as abusive

What makes me really angry is that this man has no mandate whatsoever. He is unelected, seemingly unaccountable and has shown himself to be unfit for public office on more than one occasion. If anyone typifies the government’s lack of moral authority he does. Utterly risible.

Posted by ian | Report as abusive

If traders with Europe are worried about fluctuations in the Excahange Rate, why do they not arrange for their contracts to stipulate settlement to be in Euros?

Posted by John | Report as abusive

“Is Mandy talking up the Euro?”

Is this a joke or does the blogger think we are all stupid?
Mandelson makes no secret of the fact that his whole purpose in life is to deliver Britain irreversibly into the EU and he is being handsomely paid to do so.

He will retire a rich man on the back of the work he has done for the EU.

Posted by Peter | Report as abusive