Brussels Notebook: We have hand-wringing and no action, short or long term
Last week in this column I suggested one of the long term casualties of the Iran war would be a shift in UK policy from the isolationism of Brexit to closer ties with Europe.
That is now a short term policy change, with the prime minister. Keir Starmer, confirming this week that the way ahead he is charting is built around closer ties with Europe. That does not mean a return to the EU, but it reflects a fracturing of the so-called special relationship with the United States. That has been undermined by Donald Trump, who has made the US an unreliable ally for Europe and the UK in particular; this week he reportedly even suggested King Charles would have given him the military support denied to him by the UK government and every other country in Europe. That should make for an interesting lesson on the principles of a constitutional monarchy if the royal visit to the US goes ahead as planned. We will never know whether Brexit could have been an economic success, if the headwinds against it had not been so strong. These ranged from a weak and split Conservative party through Covid, Ukraine, now Iran and an unpredictable US president. These came together to make it an economic failure. Ultimately it fell victim to political problems eloquently expressed by Harold McMillan UK prime minister from 1957 to 1963 events, dear boy, events. The debate over the impact of higher energy prices is intense and global; the impact was felt immediately, but it is masking an equally big issue. That is an inevitable rise in food prices as farmers, food processors and retailers fall victim to higher input costs. No government has the funds to insulate society from the pain of food and fuel price inflation. We know from past experience just four years ago when Russia invaded Ukraine that rising food costs are longer lasting than rising fuel prices.
This time things are worse because we are in a pincer movement of both rising - one already being felt and the other set to take off over the coming weeks.
Rising food prices change consumer attitudes. Market pressure becomes intense as people seek to balance shrinking spending power; discount stores gain and crucially for profitability high value products lose market share. From the last food price peak this is only recovering now, but the stability that brought will soon be lost again. The government at Westminster has no real solutions. It cannot afford to cushion the blow as a weak economy gets even worse; it will try to help those it defines as most in need, but that will be bureaucratic, slow and ultimately costly and ineffective. It has already ruled out radical steps taken by others, including Ireland, to cut excise duty on fuel to get prices down immediately. However that requires deep fiscal pockets it does not have and its net zero dogma. What it could do however is focus on truly radical solutions about how to ensure we have greater long term food security. This is about reducing the exposure and risks from a dependence on long supply chains. These are now both risky in terms of supplies and costly, given the rising price of shipping. Unlike the UK, the EU ratcheted up food security as a result of the fallout from Russia's actions in Ukraine. It has a group focussed on threats to food security, be those geopolitical or other threats to EU production. It has been taking a broad brush view of global events and its conclusions are uncomfortable.
It has warned of the trade threats to exports, particularly for high value food to markets now with new spending priorities; it has also underlined the risks of dependence on imports, not least on soya. It has warned of extreme price pressure from rising farm input costs, fertiliser cost and availability and the inevitable impact on consumers of rising prices.
On fertiliser, it is even warning of the risks from farmers sacrificing productivity gains from fertiliser use that would make the food supply and price situation even worse. This can be dismissed as a statement of the obvious, but only when you have that statement does it become possible to debate short and long term solutions. That is what we need to be doing, but it is not happening at Westminster or indeed in the devolved administrations.
Instead we have hand-wringing and no action, short or long term.