Food prices are rocketing all over Europe

Anyone outraged by the cost of a trip to Tesco or Sainsbury’s – or the price of filling their car – should know that they are not alone: the same bewilderment and anxiety is sweeping the Continent.

Bulgarian bus drivers are going on strike. Italian fishermen will soon down tools. Lorry drivers have sealed off oil refineries across France. Even the fishermen of Belgium, hitherto a relatively obscure force in European politics, are due to mass in Brussels.
Politicians across Europe are feeling the heat from this sudden outbreak of a distinctly Seventies variety of economic sickness. As a result, the world is about to witness a series of crisis meetings. First on the list is an emergency summit in Rome next week, called by the UN’s Food and Agriculture Organisation. After that, our ministers will go to Geneva for a World Trade Organisation gathering. The peak of activity will come in July, when Gordon Brown and President Bush join other leaders of the rich world in Japan for a G8 summit.

But they will find that the causes of this “resource crunch” are both global and complicated. Take oil prices, which now exceed $130 a barrel. The great oil crises of 1973 and 1979, which wrought havoc on Western economies and helped make Britain “the sick man of Europe”, had a simple cause: big producers in the Middle East turned off the taps. First, Saudi Arabia led an Arab oil embargo in 1973 designed to punish the West for supporting Israel during the Yom Kippur war. Six years later, the Iranian Revolution threw another immense spanner in the works.

This time, there is no problem with supply. All the Middle Eastern producers, including Iran, are pumping out their oil as fast as possible. While America wants Saudi Arabia to churn out even more, the truth is that the Arabs are selling us their oil about as quickly as they can. And with prices this high, they are enjoying a windfall worth hundreds of billions of dollars.

Instead, the central issue is rapidly rising demand. China and India, with a combined population exceeding two billion – or one third of humanity – are transforming the global economic landscape. Both are enjoying sustained booms, with China’s economy growing by at least 10 per cent a year and India’s achieving eight per cent.

Telegraph