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Budget 2017: alcohol duty rise could dampen consumer spending

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Budget 2017: alcohol duty rise could dampen consumer spending

Failure in today’s Budget by the Chancellor of the Exchequer to freeze or cut the previously announced increases in alcohol duty has been met with disappointment by the hospitality industry.

Duty on alcohol will now increase on beer and cider by 2p and 1p respectively, while it will rise by 36p on a bottle of Scotch whisky and 10p on a bottle of wine. The new prices will come into force on 13 March. It is the first time in 25 years that a Chancellor has increased alcohol duty by inflation on all alcoholic products; the last time was by Norman Lamont in 1992.

Paul Connelly, managing director of purchasing company of Beacon said that the government has added to the inflationary worries currently being faced by the industry –  in the form of the continued roll out of the National Living Wage, revised business rates and increased food costs – by increasing the duty on beer and wine by 3.9%.

“This might be the final straw for many hospitality businesses who had been holding off passing price increases onto the consumer,” he said. “My worry would be if that does happen then it will undoubtedly dampen consumer spending that has fuelled the positively revised growth forecasts of the last 12 months and smaller, independent businesses on the front line of feeling a tightening of discretionary spend will start to suffer.”

Mike Benner, managing director of the Society of Independent Brewers (SIBA) said that while he welcomed the chancellor’s announcement of a £1,000 reduction in business rates for pubs with a rateable value below £100,000, he said the 2p increase on beer tax is “a blow for the millions of people who enjoy a pint of British beer in their local pub and also for Britain’s 1,800 small brewing businesses across the country”.

He continued: “We called for local brewers and community pubs to be supported with a cut in beer duty to build confidence, enable investment and create jobs in light of increasing costs and uncertainty, but the chancellor’s decision will be a setback.”

Miles Beale, chief executive of the Wine & Spirit Trade Association, also voiced his disappointment that the chancellor had failed to support the hospitality industry. “He has increased what were already excessive and unfairly high rates of duty for the UK’s wine and spirit consumers and businesses,” said.

“Between Brexit’s impact on the pound and rising inflation the wine and spirit businesses face a tough trading landscape. This is a missed opportunity to back British business and help out struggling consumers.”

Business rate relief announced in spring budget >>

Chancellor’s business rate relief is “a tiny drop in the ocean” >>

 

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