Is powerful Mandy talking up the euro?
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.