Mandelson downplays UK euro entry

Lord Mandelson was among the cabinet's most enthusiastic advocates of joining the euro

Lord Mandelson has said the prospects of a newly re-elected Labour government seeking to join the European single currency were "not strong".

The former EU commissioner, now business secretary, said in a speech: "It could be quite some many years."

He also said in future there would be "less spending" on some programmes and efficiency savings as the government sought to rebalance public finances.

It follows bitter exchanges between the Tories and Labour over public spending,

At a lunch for lobby journalists the business secretary addressed the issue of Britain being in a position to join the euro saying: "I'm afraid it's going to be some years - more than I would like."

Lord Mandelson, who has been seen as being in favour of adopting the euro, added: "The prospects and chances of us joining the single currency early on are not strong.

There will be spending choices and a growing need for greater efficiency across the board, and less spending in some programmes

Lord Mandelson

In his speech Lord Mandelson also said there would be "sustained investment" in schools, police, hospitals and "frontline services" like defence.

But he added: "Of course we will rebalance public finances in the medium term. There will be spending choices and a growing need for greater efficiency across the board, and less spending in some programmes."

He added: "I think that the fall in the economy is coming to an end but the severity is not yet behind us."

'Own up'

The priority was to achieve economic growth and the government must not "lose our nerve" in the face of problems, he said.

Both Labour and the Conservatives have been under pressure to explain how they plan to rebalance the public finances after the next general election, expected next year.

Peter Mandelson and Alistair Darling are admitting the Conservatives were right all along and cuts will follow the election

George Osborne
Shadow chancellor

Labour says the Conservatives are planning 10% cuts, the Conservatives say the government is not being honest about its own plans.

Lord Mandelson said: "Of course we will be operating under greater public spending constraints in the coming decade than we have in the last 10 years and that's why we we need to respond to it in the way I have described, rather than the way in which the Conservatives have suggested they will set about it."

But shadow chancellor George Osborne said the cabinet was "completely divided" on public spending and it was undermining confidence in economic recovery.

"Peter Mandelson and Alistair Darling are admitting the Conservatives were right all along and cuts will follow the election," he said.

"Gordon Brown and Ed Balls, the man he wanted to be chancellor, are refusing to be honest and think they can still take the public for fools."