INCOMING European Union commissioner Peter Mandelson last night warned against what he called exaggerated gloating over Labour's economic success.

The former Hartlepool MP's speech to the Confederation of British Industry conference risked provoking allies of Chancellor Gordon Brown.

Mr Mandelson also told the Birmingham gathering that Euroscepticism was an unwanted by-product of Labour's economic achievements.

For years, he said, British governments had so messed up the economy that UK companies looked longingly to the Continent as a model of partnership in place of this country's chaotic industrial relations.

He said: "Today, Britain seems to offer its own distinctive model of economic success."

"I'm proud of the country's economic record and its achievement. But let us have no exaggerated gloating."

His words threaten to enrage supporters of Mr Brown, who addresses the conference today.

The Chancellor was involved in a dispute with Darlington MP and cabinet minister Alan Milburn, who took his place as Labour election strategist, over the extent to which the party should campaign on its economic record in the General Election, expected in May.

Mr Mandelson went on to suggest that the North-East referendum had put paid to Deputy Prime Minister John Prescott's plans for regional assemblies.

Minister Nick Raynsford has said polls would still be held in the North-West and Yorkshire and Humberside, despite last week's overwhelming rejection in the North-East, where support for assemblies was thought to be strongest.

But in a question-and-answer session, Mr Mandelson said it was pointless to debate whether assemblies best expressed regional identity.

"The people of the North East have had their say. It is an idea, in their view, whose time has gone, if it ever arrived," he said.

"I happen to see an argument for it, but the public does not embrace it and I do not think it is going to come back in that form."

In his first major speech as incoming trade commissioner, Mr Mandelson pledged determined, unwavering pursuit of economic reform in the EU.

He said the commission must pick the right fights and win them.