UK drinks industry despondent after Budget duty hike

By James Lawrence

Published: 26 November, 2025

In an entirely predictable move, Chancellor Rachel Reeves has confirmed that alcohol duty will rise with the Retail Prices Index (RPI) in 2026, provoking near-universal concern across the drinks trade.

The Scotch Whisky Association (SWA) - representing the country's biggest drinks export – responded sharply to the Budget, saying the RPI uplift will place “huge additional pressures” on a sector already grappling with “job losses, stalled investment and business closures.”

Mark Kent, chief executive of the SWA, commented: “Put simply, the government cannot expect the Scotch Whisky sector to just keep delivering growth, both at home and on the world stage, if the conditions which support growth are not nurtured. The previous 3.65% increase to spirits duty has reduced spirits revenue by 7% - a loss to the Treasury of £150m. Hiking duty today, for the third time in two years, not only limits our sector’s ability to contribute to much needed economic growth and productivity, but will once again fail to deliver for the public purse and needlessly cost jobs.”

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His warnings were echoed in a joint pre-Budget appeal from a range of stakeholders including brewers, UKHospitality, and Hospitality Ulster. Urging the Chancellor not to raise duty and instead issue a freeze for the sector, more than half of UK hospitality businesses are now anticipating further layoffs in the wake of the autumn Budget.

Meanwhile, WineGB also issued a strong response to Rachel Reeves' tax and spend programme, noting that “there is nothing in the Budget that stimulates consumer demand and there is little to bring festive cheer.”

According to CEO Nicola Bates: “Another alcohol duty hike unfairly captures the domestic wine industry, putting rural jobs, tourism, and growth at risk at a time when UK wine is gaining global recognition.

“Despite the OBR saying alcohol duty receipts have fallen, the response hasn’t been to support this important sector but to pile on costs that further discourages consumers. Small producer relief also remains at 8.5% and below so winemakers are still unable to avail of it. Sadly, the Budget also fails to take the opportunity to reduce VAT, business national insurance and fuel duty “

However, Bates was more enthusiastic about the Chancellor's announcement that the cost of apprenticeships for under 25-year-olds will now be completely free for Small and Medium-Sized Enterprises (SMEs).

“This will result in a boost for our sector, opening doors for young people to join the industry, driving more diverse and inclusive hiring, and helping our businesses and the wider wine industry. It is a further spur to the work of WineGB which has been driving wine careers with our Hiring Toolkit, Safeguarding Toolkit, EDI Hub, support for Wine Careers Week and the Future Winemakers Scheme.”

Nevertheless, the overall mood across the trade is despondent. In the short term, higher retail prices and a squeeze on margins for hospitality businesses seem inevitable.

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