Government concerns that it may lose revenue has led it to freeze duty on spirits for the sixth year running. Spirits already pay the highest duty of any alcoholic drink and it is believed that a further increase could price the drink out of the market.
Tony Mair, corporate affairs director of Diageo GB, said: "Since 1998, the Chancellor's decision to freeze spirits duty has delivered year-on-year increases in revenue for the Treasury - revenue from spirits was £2.186 billion in 2002, compared to £1.605 billion in 1998 - as well as creating stability which has enabled the industry to invest greater spend on innovation."
The Scotch Whisky Association has also supported the freeze. Chief executive Hugh Morison said: "The Chancellor's recognition of historically higher taxes on the alcohol content of spirits compared with other drinks, and his decision to narrow the duty gap is good news for the industry and represents further progress towards the industry's goal of a modern tax system for alcoholic drinks."
But Jo Williamson, chief executive of the Wine & Spirit Association, said: "A sixth successive duty freeze for spirits is welcome, but what we would really like to see is a sensible programme of duty cuts to enable us to compete fairly with our European neighbours."