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SWA calls for end to trade uncertainty as exports grow

Published:  30 August, 2019

The Scotch Whisky Association (SWA) has called on the UK government to ensure certainty in future trading conditions as Parliament returns from summer recess.

The call comes as SWA analysis of official HMRC figures shows the value of Scotch whisky exports increased by 10.8% to £2.19bn in the first half of 2019, with volume exports up 7.1% to 598 million 70cl bottles.

Single malts continue to grow in popularity, with exports up 18.8% to £652m in the first six months of the year, growing to make up 30% of the value of all Scotch shipped overseas, according to the analysis.

Exports of blended Scotch whisky grew too, rising 7.5% to £1.35bn.

The growth in exports underscored Scotch Whisky’s “enduring popularity with consumers around the world”, said the SWA, adding it does however believe that a proportion of this year’s export growth also reflects actions taken by a number of distillers to mitigate the risk of a no deal Brexit in by exporting some stocks early.

“Demand for Scotch whisky is growing both in developing markets, like India, and in established ones like the US, Japan and Germany. This reflects the enduring popularity of Scotch Whisky in so many cultures around the world,” said Karen Betts, chief executive, SWA.

It also reflects the industry’s continued focus on improving trading conditions – for example, removing tariffs and discriminatory taxes – across our global markets, she added.

However, she said, the figures also brought to life the uncertainties in today’s challenging trade environment.

“The value of exports grew more than anticipated in the first six months of 2019. We believe this was driven by action taken by producers to mitigate the risks of a no-deal Brexit and the threat of tariffs in key global markets. For example, there was significant growth in exports to South Korea and Morocco, both markets where tariffs could have been re-imposed if the UK had exited the EU without a deal on 29 March. While some progress has been made on continuity agreements, there is more work to be done.

“So as Parliament resumes after recess, we are urging the government and MPs to work constructively together to enable the UK and the EU to agree on the terms of the UK’s departure.  This will give us clarity in the UK’s future trade relationships with the EU and other global markets.

“Prolonged uncertainty is costing the industry money in no-deal planning and in exporting as companies have, where they can, brought exports forward, incurring additional capital on additional warehouses and other associated costs.

“The UK government must take these pressures into account when deciding on duty rates in the autumn budget. Cuts and freezes to spirits duty over the last five years have increased the revenue available to government to spend on public services, while at the same time giving our industry the confidence to invest in production and tourism, benefitting communities across Scotland and our UK supply chain.

“Uncertainty in our trading environment means, now more than ever, that the Scotch whisky industry needs continued tax stability here at home.”