Starbucks boss Schultz puts Mandelson in a flapuccino

Peter Mandelson has launched a furious attack on Starbucks' Howard Schultz. Too much caffeine, maybe?

Last Updated: 31 Aug 2010

Irate Business Secretary Lord Mandelson has unleashed what the tabloids like to call a ‘foul-mouthed tirade’ at Howard Schultz, the CEO of Starbucks, for suggesting that the UK economy is going to hell in a hand-cart. At a reception in New York yesterday, he was asked about Schultz’s comments, and wasn’t backwards in coming forwards. ‘Why should I have this guy running down the country? Who the f**k is he? How the hell are they doing?’ fumed Mandy – who was, lest we forget, brought back into the Government for his skilful diplomacy and political nous...

The outburst, which is being taken as an indication of how desperate the Government is to play down US concerns about the state of our ailing economy, followed an interview Schultz gave to CNBC earlier in the day about Starbucks’ current problems. ‘The place that concerns us the most is western Europe, and specifically the UK,’ he said. ‘The UK is in a spiral.’ Apparently the Starbucks chief reckons that the mortgage crisis and the breakdown in consumer confidence have been more pronounced in the UK than anywhere else.

The feeling is that Mandy has been sent to the US specifically to play down this sort of talk, so it was no surprise that when he appeared on the same show an hour or so later (with CNBC 'Money Honey' Maria Bartiromo) he was quick to take Schultz to task. ‘The UK is not spiralling, although I have noticed that Starbucks is in a great deal of trouble. So please do not project Starbucks onto the UK economy as a whole,’ he harrumphed. Mandy’s argument is that the coffee chain’s UK problems are largely of its own making, a result of its over-expansion into a saturated market. And he’s got a point: Starbucks recently announced the closure of about 1,000 unprofitable stores, including some in the UK, so its economic judgement has clearly been a bit awry lately.

Then again, we’re not sure why this disqualifies Schultz from holding forth on the UK economy – after all, Starbucks should have a better perspective on this than most, given its ubiquity on British high streets. Perhaps Mandelson is just grandstanding for political reasons, which is fair enough (tough on economic scepticism, tough on the causes of economic scepticism). And he did admit yesterday that the UK, like the US, was in ‘an uncomfortable place’ – a situation that requires ‘steady nerve and cool judgment’, rather than ‘trying to create frenzy around these issues everyday’ (a clear rebuke to the constant stream of policy initiatives from the PM’s office, according to Mandy’s opposite number Ken Clarke).

But we're not sure how much cool judgement went into yesterday's little outburst. Perhaps he'd had one too many of Schultz’s double espressos?

In today's bulletin:

Cricket hit for six as Stanford faces fraud charges
Starbucks boss puts Mandelson in a flapuccino
Ashley promises figures as Sports Direct sales jump
Mobile phone companies on the charge
Twitter investment gets tongues wagging

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