How Rachel Reeves' Budget is killing the Scotch whisky golden goose
It seems inevitable that we will see more Scotch whisky companies close their doors over the next year
It’s important we do everything we can to support Scotch Whisky,” said Prime Minister Keir Starmer in the House of Commons just last week.
Backing the UK’s biggest food and drink export, one that makes up £3 in every £100 of Scotland’s economy, supporting in excess of 40,000 jobs, and a root of production and prosperity in communities throughout the country, would seem like good sense for the UK Government.
This week, however, the Chancellor delivered another blow to the Scotch whisky industry by announcing a further tax hike on spirits – the third in three years.
It means that tax on spirits like Scotch has now risen by a staggering 17.5 per cent since August 2023. Has this resulted in surging growth and buoyant tax receipts? The opposite. Last week it was revealed that spirits revenue is down by 7 per cent in the first seven months of 2025/26 compared to the previous year. Just today, the OBR’s total alcohol revenue forecast was downgraded by £7.8bn, with spirits accounting for over 60 per cent of that.
The figures demonstrate time and again that taxing our sector harder year on year does nothing for the public purse, nor does it give producers the confidence to invest and grow. The system, and the thinking behind it, are broken. It’s time for the government to reconsider its taxation objectives and methods. This is not a recipe for growth and gain, but for regression and pain.
In recent months, our industry has done all it can to demonstrate that supporting Scotch whisky, not tying its hands with crippling taxation, was a real opportunity for the Chancellor in this Budget. Our ask for a duty freeze wasn’t a request for a handout; indeed, it was cognisant of the economic pressures here at home.
A duty freeze would have been the bare minimum required to boost much-needed growth, to drive investment in communities throughout Scotland, and to bring some confidence to the businesses behind an industry that can be an anchor for growth if the right conditions exist.
Far from fostering those conditions for growth, this Budget has just ramped up the pressure on distillers, with businesses already shedding jobs in increasing numbers. Not just distillers, but across our wider supply chain, which was united in its call for a duty freeze in recent weeks.
Scotch whisky is facing multiple economic challenges right now. Tariffs in our biggest market are continuing to bite, with export figures now showing losses in the US as demand falls.
Taxation and regulation here at home are not just smothering Scotch Whisky businesses’ ambitions, but their ability to grow at all. And the rewards of the newly signed free trade agreement between the UK and India are too far into the future to be reaped in the short term.
Amid these headwinds, the UK Government’s long-held assumption that the Scotch Whisky golden goose will just keep laying is also being challenged. Sadly, it now seems inevitable that we will see more Scotch whisky companies close their doors over the next year – something that hasn’t happened at scale since the 1980s. These are real consequences from the action – or inaction – of government to support a crucial industry here in Scotland.
It is unclear what the PM meant by doing “everything we can” to support Scotch. By any measure, this Budget failed to deliver.
Mark Kent is chief executive of the Scotch Whisky Association