Amid the financial turmoil, Peter versus George is the key battle

The Taverna Agni is one of the more expensive restaurants in Corfu, but one would scarcely expect Peter Mandelson and George Osborne to slum it. As is normal for members of London’s political elite, they found themselves in the same exotic location one August weekend. So they went to chew the kleftiko together and laugh about Gordon Brown. We know that Mr Mandelson ‘dripped pure poison’ about the Prime Minister because the fact was leaked to the press within hours — but no one ran the story. Who, after all, cared about a long-retired spin-doctor named Peter?

Scroll forward six weeks and that conversation is front-page news. When Mr Mandelson counter-attacked, hinting that he might well leak whatever indiscretions Mr Osborne made over the ouzo, it was an appetising hint of many skirmishes to come between the two politicians. The economy may be imploding and banks may be collapsing, and the two may be officially cast as Business Secretary and shadow chancellor.