HOLIDAYMAKERS travelling to the Continent this summer face record prices in restaurants, shops and hotels following a 20% rise in the value of the euro.

Soaring prices throughout Europe, coupled with fears about terrorism and worsening travel delays, are pushing large numbers of people to stay in Britain for their holidays.

Last week Britons faced paying an average of £3 for a glass of Coca-Cola or beer in France, with prices in some resorts rising to £8. A week’s car hire in parts of Greece cost £450.

Capitalising on the drawbacks of venturing abroad, the government has launched a campaign to persuade Britons to holiday at home. Over the next few weeks hundreds of thousands of people will receive mailshots or e-mails trying to persuade them to holiday in Britain, and early indications are that they are taking notice.

With temperatures reaching 28C yesterday, the hottest day of the year so far, British resorts were full and motorways to the southwest were clogged.

Many hotels and holiday companies are already fully booked for the school summer holidays. “You will struggle to get anything near the coast in July or August and peak season is now spreading into June and September,” said English Country Cottages, a holiday firm.

One bright spot for those intending to holiday abroad is that flight prices are still falling because of fierce competition. Ryanair will this week announce that its discounted fares will continue for a year.

For package holidays, however, travel agents say there is unlikely to be a wave of last-minute bargains as most operators have cut capacity since the September 11 attacks in 2001.

Over the past year the value of the pound has slumped by almost 20%, making goods priced in euros far more expensive. Many tourist shops and services on the Continent have also used confusion surrounding the introduction of the single currency to raise prices.

The Sunday Times collected prices for more than 70 items in 16 European locations last week. In one of the top restaurants in Florence, Enoteca Pinchiorri, the set menu now costs the equivalent of £126 a head, while in the Byblos Bar in Rimini, on Italy’s Adriatic coast, a bottle of beer costs £7.

A loaf of bread on the Greek island of Cephalonia costs £2.50 and a sun-lounger £50 a week.

Thomas Rickman, an accountant from south London holidaying in Majorca last week, said: “It used to be very cheap once you got to Spain, but now some of the prices are pretty eye- watering. I had to pay almost £5 for a small glass of beer.”

Costs are rising fast in cities as well as coastal resorts. In Paris an ice cream at a cafe costs on average more than £4. The French capital, Vienna and Munich have overtaken London — previously the most expensive city in Europe — for the cost of common goods, according to a study by the Economic Research Institute.

Even destinations previously considered relatively cheap, such as Dublin, Rome and Barcelona, are rapidly catching up.

Costs for British travellers are expected to spiral further before the school holidays next month as the euro continues to rise. Merrill Lynch, the City investment bank, is predicting little respite for visitors to Europe before the end of 2004.

If rising costs fail to deter holidaymakers from going abroad, other factors may. Europe is facing a “summer of discontent” as unions target tourists with industrial action.

This Tuesday 10 French air industry unions are due to strike, plus six rail unions and air traffic controllers. The action is planned to last 24 hours, although the unions may “choose to strike for longer”, says the French tourist board. Further strikes are likely.

Hoteliers and tour operators at home are looking forward to a bumper summer. The South West Tourist Board said: “We’re not really marketing the main summer season because it is already booked up.”

Additional reporting: Matthew Robinson

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