The Scotch Whisky Association (SWA) is urging the UK government to reduce taxes and support Scotch producers, a promise made by Prime Minister Keir Starmer during his campaign.
- The industry faces challenges with a significant drop in export value and volume in early 2024, attributed to a previous tax increase.
- India remains a crucial market for Scotch whisky, demonstrating growth despite existing high tariffs, with ongoing efforts to negotiate a UK-India Free Trade Agreement.
- The SWA highlights the resilience of the industry but emphasizes the need for governmental backing to navigate global economic turbulence.
- Upcoming UK Budget presents an opportunity for tax reforms to aid the Scotch whisky sector and potentially improve public finances.
The Scotch Whisky Association is calling for decisive action from the UK government to alleviate the challenges faced by Scotch producers. This plea for support aligns with prior commitments made by Prime Minister Keir Starmer. The SWA underscores the need to lower the tax burden on Scotch whisky during the Budget announcement on October 30. This request follows a substantial 10.1% duty increase in August of the previous year, which has had adverse effects domestically.
Additionally, recent data from HMRC reveals a troubling decline in the industry’s performance. During the first half of 2024, the export value of Scotch whisky decreased to £2.1 billion, marking an 18% drop compared to the same period in 2023. The volume of exports also fell by 10.2%, equating to 566 million 70cl bottles – a noteworthy decrease from 40 bottles per second to 36 bottles per second when compared to early 2023 figures.
India emerges as a vital market for Scottish whisky, recording a 17.3% growth in the first half of 2024. Despite facing hefty tariffs of 150% on imports, there are calls for the reduction of these tariffs through a UK-India Free Trade Agreement, which could significantly boost export value by £1 billion over a span of five years.
SWA’s Chief Executive Mark Kent articulated the importance of governmental assistance, stating, “The prime minister has promised to ‘back Scotch producers to the hilt’.” He stressed that while the industry is robust, the current economic volatility and inflationary pressures underline the need for supportive measures from the government.
This sentiment is further amplified as the UK Budget in late October stands as the newly elected Labour government’s first opportunity to rectify the situation. Last year’s unprecedented tax hike, the largest in four decades, reportedly resulted in a nearly £300 million loss in tax revenue for HM Treasury. Reducing the duty in the forthcoming Budget could revitalize public finances and stabilize the industry during this difficult period.
The immediate future for Scotch whisky hinges on pivotal government decisions that could fortify the industry’s resilience.
