The Chancellor is to press ahead with a 2% inflation-busting tax rise on alcohol duty.
Despite intensive lobbying from the industry Alistair Darling has stuck to the policy implemented last year – when he announced a record 18% hike – for a 2% increase above inflation for the next four years.
The British Beer and Pub Association had warned the government that 44,000 jobs had already been lost from the industry from in the past five years — and a further 75,000 were now at risk because of the above-inflation increases.
The duty rises, which came despite strong evidence that the tax-take falls with every duty rise, were implemented in today's Budget as the chancellor announced that the economy would contract by 3.5% in 2009.
Leader of the opposition David Cameron said: "The tax on beer is going to hit every drinker in every pub in the country."
The Chancellor also said that tax on tobacco would go up 2% from 6pm this evening and that, combined with the alcohol increase, it would raise an extra £6bn by 2012.
Fuel duty is expected to rise by 2p a litre from September.
Elsewhere in the budget, Darling said the Treasury would shortly publish proposals to reform the financial services and banking sectors.
He also announced: public spending growth would be cut from 1.1% to 0.7% by 2011/12; £9bn of efficiency savings would be implemented by 2013/14; £500m of extra support would go to the house building industry; the cutting of carbon emissions by 34% by 2020; £1bn to combat climate change, including £525m of extra support for offshore wind farms; and a £750m Strategic Investment Fund.
Economists suggested that national debt would peak at nearly 80% of GDP.
Andrew Smith, chief economist at KPMG, said: “The Budget projections look like a triumph of hope over experience. Despite having to drastically downgrade his forecast for growth this year, the Chancellor still expects the economy to rebound over the next two years.
“Even though Mr Darling insists that the end of the recession is in sight, we are still looking at eye-watering budget deficits and a doubling of public debt. And if the Chancellor’s growth forecasts again prove over-optimistic, the public finances will turn out even worse."
