Mandelson snipes at Brown's record

Peter Mandelson, the UK's European commissioner designate, reopened his rift with Gordon Brown yesterday when he warned against "exaggerated gloating" over Britain's recent economic success.

In remarks seen by Labour insiders as a deliberate attempt to belittle the chancellor's record, Mr Mandelson said some continental countries were doing better than the United Kingdom despite the progress made under Labour.

Mr Mandelson told the annual CBI conference in Birmingham that in former times, economic mismanagement had made British business look longingly across the Channel. "Today, Britain seems to offer its own distinctive model of economic success. I'm proud of our country's record and achievement. But let's have no exaggerated gloating about that."

The former cabinet minister and close confidant of Tony Blair acknowledged the success of the chancellor's stewardship of the economy, but added pointedly that euro membership - ruled out by Mr Brown's five tests - had brought benefits to every member of the European Union, including those who had remained outside the single currency.

A spokesman for the chancellor said: "We are going to get on with the job and continue with a disciplined and unified approach on the economy as we approach the next election and ensure that the trust of the British people in economic policy-making is maintained."

Labour insiders were furious at Mr Mandelson's comments. One said: "There is obviously a remarkable similarity be tween these remarks and remarks attributed to Alan Milburn at the party conference in which he talked of 'screaming louder and louder about past achievements'.

"There is obviously an attempt here to undermine trust in Labour's economic record and you have to ask yourself in whose interest Mandelson thinks he is acting," he said.

The chancellor believes that Labour should make the strength of the economy the centrepiece of the government's election strategy for a third term, but Mr Mandelson said other European countries were still doing better than the UK.

"The European economy has many virtues. Several member states combine stronger welfare states than our own and high employment with strong private sector R&D and enviable growth rates. Even 'core' Europe still retains powerful competitive strengths."

Mr Mandelson stressed, however, that the European model would remain flawed as long as "growth is anaemic and millions are condemned to unemployment and inactivity".

Europe, he said, was being "outsmarted and outgunned" in key sectors by its international rivals, and there was a prospect of "Europe's relative economic decline in the world".

While still awaiting confirmation that he will be Europe's next trade commissioner, Mr Mandelson said criticism of European policies should not be confused with outright rejection of the European idea.

"We must never allow the case for reform in Europe to be presented as the case against Europe itself," he added.

What was needed, he said, was a new European conver gence between British-style economic openness and market flexibility with continental-style investment in social and economic infrastructure, scientific research and development, and public services.

The task of the new team of commissioners assembled in Brussels would be to help stimulate growth and create jobs. "Growth and jobs must be our focus. That is what I call getting back to basics," he continued.

He rejected the idea that Britain could have a semi-detached approach to Europe.

"Some people say - why can't we in Britain have the benefits of Europe's single market but without the entanglement of all that harmonising legislation, the Brussels bureaucracy and now the constitution? In other words, why can't we be another Norway?

"But for Britain 'associate' membership of the European Economic Area would create business uncertainty and mean lost inward investment.

"We need a strong British voice batting for British interests. No way can we have that with 'associate' membership of a club that is run in the interests of its 'full' members."

Mr Mandelson went on to suggest that the north-east referendum had put paid to deputy prime minister John Prescott's plans for regional assemblies.

"The people of the North East have had their say. It is an idea, in their view, whose time has gone, if it ever arrived," he said.

"I happen to see an argument for it, but the public don't embrace it and I don't think it is going to come back in that form."