WILL José Manuel Durão Barroso live up to his reputation as a reformer of almost Thatcherite aggression? No one knows; that is the unfortunate result of the way that the new President of the European Commission has been chosen, by the elimination of all those who have been more outspoken.

But the answer will come quickly in his appointments to the European Union’s two most important economic jobs. Above all, it will depend on how he settles the row about whether there should be a new supremo to oversee all these posts, and if so, what kind of person that should be.

Barroso’s reputation as a reformer comes from his two years as Prime Minister of Portugal. When he took over in April 2002, the budget deficit was ballooning, breaching limits which euro countries are supposed to observe, although France and Germany decided to ignore them last year. He plunged the country into a deeply unpopular austerity programme, cutting public service jobs and reforming labour laws.

Alasdair Murray of the Centre for European Reform in London argues that as Barroso “tried to do some of the hard work, I’d have thought he might want to get tough with France and Germany”.

Barroso may also feel some allegiance to the “Lisbon Agenda” set out by the European Council in 2000. This is a ten-year plan to make the EU the world’s most dynamic and competitive economy. It has been much derided since then, as some of Europe’s largest economies slumped.

The first decision Barroso will make is the most important: whom to appoint to the two main economic posts. At the moment, they are held by aggressive free-marketeers.

Competition Commissioner: Now held by Mario Monti of Italy, who may stay in place. From Britain’s point of view, he has been good. He began with a vigorous attack on anti-competitive practices, but marred this with some rushed decisions which were vulnerable to challenge.

Paris is now lobbying to secure the post, probably for Jacques Barrot, 67, Regions Commissioner, and an old Chirac party loyalist. Britain would back any proposal to move Frits Bolkestein, the Dutch Commissioner now in charge of the Internal Market, to Competition. Monti himself offers a precedent for moving from one portfolio to the other but many think it unlikely.

Internal Market: This is the second hugely influential job, in charge of forging the internal market and breaking down cross-border barriers. It covers tax (to the limited extent that the EU has a say) and financial services rules, important for the City.

Apart from the two big posts, other commissioners play supporting roles.

Economic/Monetary Affairs: The job mainly concerns the euro. Otherwise, it comments on broad outlines of policy, and so is a department of critics more than legislators.

Energy and Transport: There are important single market elements, particularly in power and airlines, but it does not set the overall tone.

Enterprise and the Information Society: Telecoms aside, a lightweight portfolio.

Supremo? The big question. It is up to Barroso whether he wants anyone at all to hold the proposed senior post of Commissioner for Economic Reform.

The plan was contained in a joint letter last year signed by Britain, France and Germany.

Britain backed the plan partly because it felt there was a case for a “super tier” of commissioners to advise the President. But it also thought that the job would be a kind of “Lisbon Commissioner”, in charge of pushing ahead reform.

Yet the plan now discussed appears much closer to Germany’s notion of someone who would oversee industrial policy, overriding other commissioners if they acted against “Europe’s interest”.

Germany knows who it wants to put in the job, too: Günter Verheugen, now Enlargement. But it has been on the back foot because of Germany’s own slowness in making reforms and the dismal performance of its economy, despite a recent pickup in manufacturing and exports. Thomas Matussek, the German Ambassador to Britain, argues that Verheugen should get the job because “we believe he is an excellent candidate, we are the largest economy, we are completing a major reform programme, and our economy is sound and strong even though we are undergoing a rough patch”.

Others express less confidence about the degree of reform. Hans-Werner Sinn, head of the influential German economic institute Ifo, said last week: “There are too many structural problems in Germany for it to be possible to participate in the world upswing like other countries.”

Alasdair Murray believes that Germany is unlikely to prevail. “The worst thing that could happen — (the appointment of) Verheugen — won’t”, he says. “Even though he has a liberal bent, it would be perceived as giving Germany a veto over Commission economic policymaking”.

The Irish presidency of the EU, which ended this week, achieved more than anyone expected with agreement on a constitution and a President. But that does not mean the big decisions which will determine Europe’s character are over. The next ones are in Barroso’s hands.

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