Eurozone finance ministers in Frankfurt have been trying to get a grip on record fuel and food prices. Austria suggested taxing commodity speculation – a move which would hit Britain, being a major centre of commodity trading. France – which is in the grip of widespread fuel protests – proposed an upper limit on fuel VAT – an idea rejected on the grounds that oil-producing countries, and not the consuming countries would benefit.
The chairman of the meeting, Jean-Claude Juncker said: “The oil-price, like that of food, will stay at a high level, so short-term fiscal measures and controls will not be the kind of thing to allow a substantial reduction in the burden associated with the rise in the oil-price.”
As the ECB chief reminded ministers that Central Banks’ mis-management of the 1970’s oil crisis severely damaged the world economy, the International Monetary Fund was revising its Eurozone growth forecasts.
The IMF has bumped the earlier 1.4 per cent prediction for this year up to 1.75 per cent. Next year, the IMF reckons the 15 nation eurozone will grow by 1.25 per cent.
Food prices too are soaring, accounting for an increasingly large chunk of household budgets, and contributing to the fastest rise in 16 years. The IMF says inflation will fall below its 2 per cent target by the end 2009. But European officials believe the IMF is being too optimistic.