‘This Budget is a hammer blow’ as UK alcohol duty rises with inflation

The UK Government’s decision to raise alcohol duty in line with RPI from 1 February 2026 has ignited fierce reaction across the drinks sector. Producers, trade bodies and public health groups are now setting out competing visions for what this means for drinkers, venues and the wider economy.

Alcohol duty will increase with RPI inflation from 1 February 2026, according to the official Budget 2025 policy paper. The government stated that the change aims to “maintain its current real-terms value” and said the decision “balances the important contribution of alcohol producers and the hospitality sector to the UK’s culture and economy, with the duty’s role in reducing alcohol harm” as per the document. Small producer relief will also be uprated so eligible producers maintain their relative reductions.

Miles Beale, chief executive of the WSTA, offered a typically forthright response, describing the move as “disappointing and shortsighted”. He added that raising duty “will only prolong the economy’s doom loop” and argued that “no matter how much evidence we provide showing that tax hikes don’t work for anyone, the Treasury continues to press ahead with its ill-founded plan”.

The view from Scotch

The Scotch Whisky Association expressed similar dismay. According to SWA chief executive Mark Kent, the increase places “additional pressure on a sector suffering job losses, stalled investment and business closures”. He stressed that the previous 3.65% rise had “reduced spirits revenue by 7%” which he said amounted to a £150 million loss to the Treasury. Kent described the decision to increase duty for the third time in two years as one that “will once again fail to deliver for the public purse” and warned that the government had chosen to ignore calls for “breathing room for a critical Scottish industry”.

The UK Spirits Alliance was equally severe. UKSA spokesperson Karl Mason said: “This is a sad day for the nation’s distillers, pubs and the wider hospitality sector.” He argued that “three in ten landlords are scared that they will go bust within a year if costs increase” and claimed that “successive duty hikes have already cost the Treasury billions of pounds”.

Wishbone Brewery in Yorkshire posted its own intervention on X, calling for higher beer duty on large-scale producers and describing the current structure as one that gives “those with Millions in the bank a pay rise”.

Investment concerns for whisky

The whisky investment world added its own perspective. Paul Kopec, chief executive of Speyside Capital, told db the decision was “a serious mistake”. He stressed that the domestic market accounts for only around 10% of whisky volume yet faces the full weight of duty and VAT. According to Kopec, increasing duty “risks reducing consumption” and “accelerating domestic job losses” across bottling, distribution, hospitality, retail and tourism.

He added that investor confidence remains tied to the strength of the UK market, arguing that when the government “treats Scotch as a convenient means of revenue, global capital may increasingly look to markets where government policy actively supports growth”.

CAMRA welcomes business rates change but challenges remain

CAMRA reacted in real time on X during the Chancellor’s statement. The organisation welcomed the confirmation of permanently lower business rates for hospitality businesses in England and a package aimed at supporting high streets. However, CAMRA criticised the lack of cuts or freezes for duty on draught beer and cider and said making the licensing system simpler “won’t be enough to properly support consumers, pubs and breweries”.

Public health sector supports the rise

The Institute of Alcohol Studies took a different view. Its chief executive Dr Katherine Severi said the decision “sends a clear signal that ministers aren’t bowing to the barrage of misinformation and aggressive lobbying from the alcohol industry”. She said that past duty cuts had handed out “more than £28 billion in tax breaks” to producers even as “alcohol deaths, hospital admissions and inequality have soared”.

According to Severi, the UK needs a national alcohol strategy with measures such as minimum unit pricing and a duty escalator to target cheap supermarket alcohol. She said tackling alcohol harm is “vital for economic growth” and pointed to the “well over £5 billion a year” productivity loss in England attributed to alcohol.

Hospitality tech sector seeks stability

The wider hospitality world responded with cautious pragmatism. As per Matthew Prosser, senior director at Agilysys, the Budget provides “some respite” through commitments to permanently lower tax rates for retail, hospitality and leisure properties. Yet he warned that a potential tourist tax could deter domestic travellers and that rising wages and operating costs will continue to squeeze businesses.

Prosser told db that operators will increasingly need modern hospitality technology to manage pressures and that those who embrace integrated, people-focused systems are already differentiating themselves.

Night-time economy calls budget a “hammer blow”

The Night Time Industries Association offered one of the starkest assessments. Chief executive Michael Kill said: “This Budget is a hammer blow to an already fragile night-time economy.” He added that rising inflation and everyday costs have left consumers with little disposable income and warned that many venues “will inevitably see businesses handing back their keys by January”.

According to Kill, the combination of rising wage costs and further tax pressures presents “a serious challenge” for a sector that employs large numbers of young people. He concluded that “the Chancellor has clearly not read the room”.

Across the industry, the mood runs from resigned frustration to outright fury, countered only by the cautious approval of public health groups who see the increase as overdue. Duty rises may be an annual ritual but this year’s reaction reads as something more fundamental: an argument not just about tax but about what sort of drinking culture Britain wants and who will be left to shape it.

Related news

Night-time sector warns Budget hikes could dim Britain’s nightlife

Hospitality must sell 29.5 million extra pints a day to cover Budget

UK bars strong in October but Autumn Budget could thwart growth