When political mischief is afoot, it is likely that Lord Mandelson will be involved. As the pound sinks towards parity with the euro, a whispering campaign is under way suggesting that Britain would do well to abandon weak sterling and enter the robust currency across the Channel.

Jose Manuel Barroso, president of the European commission, has commented that “people who matter in Britain are thinking about it” and musing that “if we had the euro we would have been better off”. Given that Gordon Brown is unlikely to have said that, and that Peter Mandelson is a former commissioner who has stated that “our aim, our goal, should be to join the single currency”, I know where my finger points.

The business secretary may believe that he is stirring things up for the Conservative party. He is right up to a point. He lured William Hague, the shadow foreign secretary, into the Daily Mail to pledge that a Tory government would never take Britain into the euro. Writing so dogmatically on Europe and in that paper reminds us of yesterday’s Conservative party, absorbed with shoring up its dwindling core vote and obsessed with national sovereignty and internal feuds. The article may stimulate a riposte from one of the party’s euro-enthusiasts such as Kenneth Clarke, Lord Heseltine, Lord Patten or Lord Brittan. If so, the public will be reminded of the split that crippled the party before it lost office 12 years ago.

That roll call of grandees underlines that there are no supporters of the single currency in the front ranks of today’s party. There is little danger that it will again appear schismatic. More to the point, David Cameron must ensure that the message on Europe does not drown out others. He has got the party to talk about health, education and global warming. He will not want voters to think that even now his spokesmen feel more passion for denouncing European federalism than for his new agenda.

Still, Mandelson’s intervention requires a much sharper response from the Tories. In reality it is much more poisonous for Brown than Cameron. Does it help Brown for his most senior colleague to highlight how much the government has devalued our currency by suggesting that we should abandon it because it is so weak? As Brown said in 1992, when Britain was forced out of the European exchange-rate mechanism, “a weak currency arises from a weak economy, which in turn is the result of a weak government”.

Mandelson knows that entering the euro is not on the prime minister’s agenda. As German and French economic policies diverge, the eurozone may yet pay the price for its fiscal laxity. The political imperative of setting up the single currency pushed aside the disciplines that its architects had thought essential. The euro has been strong in good times, but we shall see whether all its economies can endure the rigours of common rates of exchange and interest as the bad times persist.

However, even without theorising about trends in the Italian economy it is obvious that Brown will shun the single currency. The polls are firmly against it. One, taken just before Christmas, shows that sterling’s weakness has not led the public to believe that Britain would be better off in the euro. The vast majority think it would make no difference and support for joining it languishes at 23%. This support has never exceeded 25%.

Voters’ consistency on this is remarkable. You might have expected that familiarity with the euro, enjoying the convenience that it brings as we cross borders on the Continent and observing that France and Germany seem no less sovereign than they did, might have whittled away British opposition. Evidently, the nation is staunch either in its attachment to the pound or in its antipathy to the European Union. What ever the reason, Brown would not want to antagonise it, even if he lacked reasons of his own for keeping Britain out.

For the foreseeable future the euro is a red herring. By introducing it Mandelson risks irritating Brown. It is the cue for George Osborne, the shadow chancellor, to point out that the deterioration in sterling is one catastrophe for which Brown cannot shuffle blame on to the global recession. Around the world, investors are looking at Britain’s levels of debt, the government’s policies and our economic prospects and deciding to sell pounds in favour of euros and dollars. If our woes are, as the prime minister argues, a contagion from the United States, it is curious that its currency is so widely preferred to ours.

The Conservatives have allowed the government to get away with a devaluation that would have destroyed most administrations. Jim Callaghan had to resign as chancellor when in 1967 he devalued by about 14%. The events of September 16, 1992 proved cataclysmic for John Major’s government. But, when measured against a basket of currencies, the devaluation in recent months approaches 25% and for a parallel we must go back to the collapse in 1931 when Britain abandoned the gold standard.

By comparison with any previous era many more people are directly affected because they holiday overseas or hope to buy a foreign property. Yet during this sterling crisis the government has climbed in the polls.

That should shame the Tories. Perhaps their failure is partly down to Mandelson’s damaging revelation of Osborne’s conversation with the billion-aire Oleg Deripaska on his yacht. Hague will not make up lost ground by returning to the stridency that lost the party the last two elections. Osborne should open another front: by revealing Mandelson’s gaffe. Harking on the euro not only draws attention to the lamentable state of the currency; it also exposes the fact that Brown has destroyed all his own successes. That is why discussion about the euro has resurfaced.

In his first months as chancellor, Brown quashed the argument for British entry. For decades before 1997, British governments had set interest rates. When they built up debts they inflated and during recessions they let the currency slide to boost exports. By giving the Bank of England independence and creating rules that limited government borrowing (just as the Maastricht criteria specify maximum deficits in the eurozone), Brown established disciplines that many had argued could come only from an external authority such as the European Central Bank.

As Mandelson must recognise, in the past few months the Bank of England has ceased to be independent, with interest rates being set by ministers, and the government has abandoned the fiscal rules. It is no coincidence that confidence in the pound has evaporated.

The message Brown sends to international investors is that the British economy is today being run as it was during much of the postwar period. They can expect the government to debase the value of the pound routinely at home and abroad. That is the cat that Mandelson has let out of the bag. He implies that without an independent Bank or fiscal prudence Britain might as well decide, as other indisciplined countries such as Greece and Italy dida decade ago, to enter the euro in order to tie the hands of a prime minister who cannot be trusted.

Hague has promised us that the Tories will never take us into the euro. Surely we knew that already. It would be more interesting for the Conservatives to argue that if Brown wins another term many will conclude that Britain’s only hope is to allow the European Central Bank to impose the discipline that the government has renounced.

If Osborne can turn the argument, he may yet have his revenge on Mandelson. Not for the first time Mandelson has been too clever for his party’s good. The prime minister brought him back into government to exploit his mastery of the black political arts. But Brown well understood even then that he was also importing trouble.

Martin Ivens is away

Times Recommends

• Tear down this wall! And save the planet
• Double click if you want the bin emptied
• Have you got permission to read this?