European Union finance ministers struggled yesterday to forge a response to food and fuel price inflation, proposing remedies from windfall taxes on oil companies to the suspension of various food import tariffs. Several ministers, notably Wilhelm Molterer of Austria, denounced what they termed "speculation" on commodities futures markets, saying it partly accounted for recent increases in food and oil prices. But the attack attracted little support and was omitted from a letter to EU heads of state and government, who will discuss food price inflation at a Brussels summit on June 19. The rising cost of products such as pasta, rice and petrol is a headache for EU governments worried about the political impact on their popularity and the financial impact on low-income citizens. At its present level of 3.6 per cent in the eurozone, inflation also keeps up borrowing costs for businesses by virtually ruling out an interest rate cut by the European Central Bank. Ministers agreed yesterday that one way to control food costs would be to stimulate competition and market concentration in national food distribution and retail networks. In general, however, EU governments have limited options at their disposal, because food and fuel inflation is to a great extent driven by high demand outside Europe. "At home we can look at our tax policies and our labour policies, but I don't think a general tax decrease is a good answer," said Wouter Bos, the Dutch finance minister. Giulio Tremonti, Italy's finance minister, said oil companies should be taxed on the extraordinary profits reaped because of record oil prices. "We are living in extraordinary times that require extraordinary measures. There is a bottle of Champagne on top of the petrol pump and it's called 'Speculation'," he said. At a food aid conference in Rome, Silvio Berlusconi, Italy's prime minister, said an EU country sending food aid to needy parts of the world should have the cost excluded from its budget deficit. The proposal, which he vowed to raise at the EU summit, is unlikely to impress governments accustomed to Mr Berlusconi's instinct to present Italy's stretched public finances in the best light. The UK suggested the Euro-pean Commission ex-tend its suspension of import duties on cereals to other tariffs. "I do not see how Europe can justify keeping EU prices so much higher than world market levels at a time when people across Europe are really feeling the pinch," said Yvette Cooper, UK chief secretary to the Treasury. The UK's broader aim of cutting EU farm subsidies is destined to meet firm opposition from France and Germany, which see no reason to scrap the payments and want them to continue after 2014, when the next EU budget cycle will take effect. There was better news yesterday for the EU's small and medium-sized businesses, which were offered the chance to receive more loans on simpler terms from the European Investment Bank and the commercial banks it works with. "It is clear the market alone is unable to provide sufficient and appropriately priced finance for SMEs, in particular for high-growth, innovative businesses," said Phil-ippe Maystadt, EIB president. The UK was especially keen to see improved access to EIB finance because of difficulties facing SMEs during the credit squeeze. Eurozone growth revised upwards Eurozone growth in the first quarter was stronger than initially reported, according to data released ahead of tomorrow's European Central Bank meeting to set interest rates, writes Ralph Atkins in Frankfurt. Gross domestic product in the 15-country region rose by 0.8 per cent compared with the previous three months, according to Eurostat, the European Union's statistical office. Last month it reported a 0.7 per cent increase. In the same period, the US economy expanded by just 0.2 per cent. Robust economic activity has encouraged the ECB to keep interest rates on hold. In Barcelona yesterday Jean-Claude Trichet, ECB president, reiterated the central bank's determination to keep inflation under control. The "disinflationary impact" on the eurozone of competition from low-cost states could be weakening, he added. Eurozone inflation is at a 16-year high of 3.6 per cent. Mr Trichet underlined the complicated task facing policymakers. "Rather than a single deep correction with a single source, the global economy in which we live is facing a multiplicity of interdependent shocks in key areas," he argued. Copyright The Financial Times Limited 2008