Jeremy Hunt's war on Scotch whisky is bad politics

The Chancellor’s decision to slap a ten per cent duty hike on Scotch whisky is bad economics. Exports broke the £6 billion mark last year and the industry employs 11,000 people in Scotland while supporting 42,000 jobs across the UK. But whisky is a luxury item in a competitive global market where increases in retail price impact consumer behaviour. Five of the top ten export destinations by value (United States, France, Germany, Japan and Spain) are economies experiencing sharp declines in household income.

Driving up the industry’s costs also hampers one of the biggest export challenges facing Scotch whisky today: breaking India. Per bottle sales rose 60 per cent last year but Scotch still only accounts for two per cent of the Indian whisky market. Given India’s rapid population growth, forecast to overtake China this year, it is a highly desirable market with the potential to create additional profits and jobs in the UK. Against this backdrop, increasing tax on the average bottle from 70 to 75 per cent is an act of economic vandalism.