Chancellor of the Exchequer, Rachel Reeves, faced increasing pressure from industry leaders and opposition MPs to ease the tax burden on the drinks trade, particularly the whisky sector, but made no concessions in her latest economic announcement.
In her recent statement, often referred to as an “emergency budget” by Shadow Chancellor Mel Stride, Reeves revealed substantial spending cuts aimed at addressing the UK’s economic challenges. Among the most significant measures were £4.8 billion in welfare cuts, along with plans to generate an additional £1 billion by targeting tax avoidance.
Reeves also outlined plans to increase defense spending, which will be offset by reductions in foreign aid. These announcements came on the heels of a new report from the Office for Budget Responsibility (OBR), which downgraded the UK’s expected GDP growth for 2025 to just 1%, down from an earlier projection of 2%. The OBR attributed the revised forecast to US tariffs under President Donald Trump, which are anticipated to impact UK growth.
Addressing the situation, Reeves expressed dissatisfaction with the revised growth forecast, describing the need for decisive measures to restore the economy. She outlined a plan to reduce the fiscal deficit from £36.1 billion in 2025/26 to a surplus of £9.9 billion by 2029/30. The OBR’s projections suggest that Reeves’ policies could add £15 billion to the UK economy over the next decade, helping to restore the government’s financial flexibility.
However, despite hopes from the wine and spirits industry for some relief, Reeves made no mention of the sector during her statement. The omission came as a blow to many, including SNP MP Graham Leadbitter, who represents a constituency housing a third of Scotland’s whisky distilleries. Leadbitter had previously called the Spring Statement a “last chance” for the chancellor to address what he described as a damaging tax raid on Scottish whisky.
The whisky industry has already faced a 3.65% increase in duty in line with inflation last month, a move that led to higher taxes on Scotch whisky. Leadbitter criticized the government’s approach, stating that Westminster’s actions had placed the industry in a precarious position, ultimately costing the public purse millions in lost revenue.
While Reeves’ budget is seen as a critical step toward addressing the UK’s financial strain, her decision to maintain the tax increases on alcoholic beverages, particularly whisky, has left many in the industry and political circles dissatisfied.
You Might Be Interested In:
