Peter Mandelson dramatically reopened the split between the supporters of Tony Blair and Gordon Brown yesterday when he accused the Chancellor of indulging in "exaggerated gloating" over his economic record.
In his first public appearance since being appointed as the new European trade commissioner, Mr Mandelson sent a clear signal that he will use his Brussels posting as a political counterweight to the Treasury over European policy.
Mr Mandelson launched a robust defence of Britain's place in Europe and dismissed calls that the EU should "emulate the raw divisions of America's more polarised society".
His comments contrast with the Chancellor's often-repeated comments that Europe should learn from the economic success of both the UK and US in pushing through tough reforms on the continent.
In a keynote address to the national conference of the CBI, Mr Mandelson, who is one of New Labour's strongest supporters of Britain joining the single currency, admitted business support for Europe had weakened over the last decade.
"In part this is an unwanted by-product of the Labour Government's economic record," he told business leaders.
He said that in the past the record of successive governments of "messing up" the economy had led businesses to "look longingly" to the Continent as a model for growth. "Today Britain seems to offer its own distinctive model of economic success [and] I'm proud over the country's economic record and achievement," he said. "But let's have no exaggerated gloating about that."
His words will antagonise supporters of the Chancellor, who will address the conference himself today. One Labour Party source said the remarks were "remarkably similar" to comments made by Alan Milburn at the party conference. Mr Milburn accused the Chancellor of "screaming louder and louder" about his economic record.
"There's obviously an attempt to undermine trust in our economic record and you have to ask yourself in whose interests Mandelson thinks he is acting," the source said.
A spokesman for Treasury said the Government would continue to pursue a "disciplined and unified approach" to the economy in the run-up to a general election. Mr Mandelson acknowledged that Europe was facing the prospect of further relative economic decline. "We therefore have to raise our game so that we remain a global economic leader," he said. "It is getting back to basics on Europe."
He echoed the Treasury's message that the European Commission needed to pursue an agenda of economic reform but implicitly criticised the Treasury's insistence that Europe adopt elements of the US economic model. "We do need more American-style dynamism in Europe but without emulating the raw divisions of America's more polarised society," he said.
He said the EU should combine UK-style economic openness with "continental-style investment" in social and economic infrastructure, science, R&D and public services.
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