Splitting the Bill: Alcohol's Impact on the UK Economy

Economic questions are central to the formation of alcohol policies, such as the setting of alcohol taxes, licensing requirements and marketing regulations. In particular, arguments around income, employment and trade are regularly used by the alcohol industry to resist measures to discourage consumption and harm. Such arguments are premised on the assumption that a successful alcohol industry is beneficial to the UK economy.

This report critically examines that assumption. It attempts to do three things:

i. Collate the basic facts about the impact of the alcohol industry on the UK economy and how this has changed in recent years. This involves reviewing both the benefits (income, jobs, exports and taxes) and, as importantly, the costs (in terms of sickness, unemployment and deaths) that it generates.

ii. Analyse how changes in alcohol consumption affect the economy – and in particular determine whether reducing drinking is likely to have negative economic consequences.

iii. Describe the likely effect on the alcohol industry of two major recent policy developments - the raising of the minimum wage and Britain’s exit from the EU.

It finds little convincing evidence to suggest that lower spending on alcohol would harm the UK economy, and indeed offers some grounds to believe that reducing drinking could be of economic benefit.