(guardian) Lord Mandelson, the business secretary, expressed regret yesterday after he became embroiled in a four-letter-word spat with the head of Starbucks, Howard Schultz, over the American entrepreneur's claims that the British economy was in a spiral of decline. Mandelson was in New York to deliver a speech warning that EU member states faced a threat from competing bail-out programmes for different industrial sectors. But he became angered by Schultz disparaging the UK economy on a cable TV channel and was caught out swearing about the way the Starbucks founder dismissed the UK's economic fortunes. Schultz claimed that Britain was in an economic spiral and said: "The place that concerns us the most is western Europe, and specifically the UK." He said it had taken between a year and 18 months from the beginning of the credit crunch for consumer confidence to fracture in the US, but the deterioration had happened far more quickly in Europe once financial cracks appeared. Asked about his biggest concerns, Schultz said: "Unemployment, the sub-prime mortgage crisis, particularly in the UK, and I think consumer confidence, particularly in the UK, is very, very poor." Mandelson hit back on the same channel, saying Britain was "not spiralling, although I've noticed Starbucks is in a great deal of trouble - but that might be because of their over-expansion, given the state of the market." Later, at a drinks reception, he escalated the rhetoric when he was overheard saying in what was intended as one of his trademark off-the-record asides: "Why should I have this guy running down the country? Who the fuck is he? How the hell are they [Starbucks] doing?"

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