Happier times: Lee (centre) with fellow RTÉ presenters (from left) Mark Little, Miriam O'Callaghan, Ray D'Arcy and Des Cahill in 2006

On Tuesday afternoon last at 12.30pm, George Lee walked into the office of the RTÉ managing director of news, Ed Mulhall, with some bad news.

Mulhall was surely bracing himself for the worst when Lee sat down. The Irish Times had reported that day that the RTÉ economics editor would be unveiled as Fine Gael's candidate for Dublin South and Lee had rung Mulhall that morning to seek a face-to-face meeting.

Nevertheless, the sense of shock for Mulhall must have been enormous. RTÉ was losing one of its stars. 'George' was a brand, a household name. Passionate, intelligent and articulate, he was a celebrity whose credibility had increased in inverse proportion to the country's economic fortunes. The gloomier his countenance, it seemed, the more he was loved by the nation.

RTÉ's loss, however, is most definitely Fine Gael's gain. If party strategists had sat down at a computer and inputted all the criteria necessary for the perfect candidate for Dublin South, it's likely that the computer, after analysing all the data, would have spewed out the name 'George Lee'.

The response to him on the streets of the constituency has being nothing short of phenomenal, as men queued up to shake his hand and woman to hug him. "We have the political equivalent of the hugging nun," joked one Fine Gael insider.

And unusually for a high- profile personality parachuted into the constituency, there is precious little signs of antagonism, with TDs Alan Shatter and Olivia Mitchell seeming to be onside. "We practically had to hose down the members at the convention, they were so giddy about it," a party source said.

However, the response in nearby Montrose was somewhat less euphoric. RTÉ management was aware of the rumours and media speculation linking Lee with Fine Gael but, in the words of one RTÉ insider, "we believed him when he indicated that he had no intention of running".

Two or three months ago, in response to a posting on the website Politics.ie linking Lee with Fine Gael and Dublin South, RTÉ had inquired of its economics editor if there was anything in it and he responded in the negative. Further clarification was sought from Lee after additional media inquiries and each time the answer was the same. In late February, Phoenix magazine ran a story with the headline: 'George Lee for FG in Dublin South?'

This newspaper contacted Lee personally around this time to inquire if he was talking to Fine Gael and was surprised when the person returning the call was not Lee, but an RTÉ press officer. It seemed an unusual way for a journalist to be handling a routine inquiry from another journalist, but the response from RTÉ was a categoric dismissal of the story.

By last weekend, with the date finally set for the by-election and the Fine Gael constituency convention set for the following Wednesday, speculation intensified regarding Lee. This newspaper received two tip-offs on Saturday morning that he would be unveiled as the candidate early in the week. Lee himself was uncontactable, but a query from the Sunday Tribune to the RTÉ press office on Saturday morning brought an unequivocal response: "He is not in any shape or form considering standing for Fine Gael".

The press office had been unable to contact Lee that day. But there was nothing particularly unusual in that given he was not on duty and it was understandable that the press office would assume there had been no change in his earlier position.

However, Lee's position had changed considerably. According to Lee, he spent the bank holiday weekend in Belfast agonising over whether to leave RTÉ for a new challenge.

Many in RTÉ are willing to give Lee the benefit of the doubt over how he had handled his departure. "He was caught either way. If he'd said he was thinking of going, we would have to have pulled him straight away. He was trapped. I don't know how else he would have done it," said one senior source.

But it appears not everyone was so understanding. Senior management in RTÉ were said to be furious at being kept in the dark. And there is also some unease that Lee was on the one hand acting as economics editor – which involves regular commentary on government policy – and at the same time the subject of an approach from the main opposition party.

Lee himself, in an at-times tetchy interview with RTÉ's Sean O'Rourke for the News at One on Tuesday, said he had been approached by Fine Gael "a month or two ago", which would suggest the initial approach was made in early March. That was a number of weeks before RTÉ screened a documentary by Lee with the no-punches-pulled title: 'How we blew the boom'. In the same week, Lee was featured on the front cover of the RTÉ Guide.

Lee got quite irate when O'Rourke put it to him that RTÉ was obliged under law to be objective and that he might have had an obligation to confide in his employers that he was in talks with Fine Gael. "I'm perfectly entitled to consider my future. I'm perfectly entitled in my own mind to make that decision without you or anybody else in RTÉ deciding that you must say what I will do," he said, later pointedly adding: "I don't need you or anybody else in RTÉ to tell me what my future is."

Although one Fianna Fáil source joked last week that "we always knew George was a blueshirt", there is no suggestion that Lee's reporting was in any way compromised by his talks with Fine Gael. Lee has also pointed out that a formal approach – believed to have been by the party's top strategist Frank Flannery and general secretary Tom Curran – only came after the recent mini-budget in early April. However, what is inarguable is that Lee's programme and the RTÉ Guide interview would not have gone ahead if RTÉ management had been aware that any talks were going on.

Lee was at pains to stress that he hadn't made up his mind for definite until last weekend, and many in RTÉ accept that. However, it does seem strange that Fine Gael looked to move the writ for Dublin South almost two weeks ago if they did not have a candidate lined up. Furthermore, it has emerged that Lee posed for photographs with Dublin South TDs Alan Shatter and Olivia Mitchell prior to last weekend.

Although some questions linger about his handling of his departure, the reality is the public probably couldn't care less. For them, Lee is a touchstone for their anger at the state of the economy. He called it right. The government called it wrong.

Whether he is cut out for politics, only time will tell. He certainly doesn't lack self-belief. On at least three times during his RTÉ interview, he said it was time for "people like me" to get involved helping to put the country "back together".

Grizzled political veterans cringed at his line about his future grandchildren asking him what he had done to help – "the level of self-absorption is quite baffling", was the response of one Fianna Fáil observer. And it has to be said that, the track record of economists – Garret FitzGerald, Alan Dukes, Martin O'Donoghue – in politics is patchy to say the least.

Even those in RTÉ who raved about his abilities as an economic editor, and bemoan the station's loss, question whether he will suit the grind that politics undoubtedly is. "I'm not sure George is terribly interested in politics. It's quite a gamble for him," one colleague said.

But gamble or not, it would be a brave man who would bet against him sweeping all before him on 5 June. By George, Fine Gael's got it.