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The economic impact of changes in alcohol consumption in the UK

The UK has one of the highest alcohol consumption rates per capita in the world – ranked 25th according to the latest global report on alcohol by the World Health Organisation (WHO, 2014).

While there are several well documented detrimental effects of alcohol consumption on health, crime and productivity (Holmes et al, 2016), the sector also contributes positively to the UK economy through its production and sales activities.

The sector supports 770,000 jobs (IAS, 2017a) – and generates substantial revenues for the UK Treasury, with more than £11.15 billion raised through alcohol duty alone in the 2016/17 financial year (HMRC, 2017). Any overall assessment of the economic impact of the alcohol industry would have to take account of all the costs associated with the adverse effects of alcohol consumption (including absenteeism and presenteeism).

However, a comprehensive cost benefit analysis is beyond the scope of the present analysis. Rather, in this study we seek to provide the best possible estimates of the sector’s impact on the UK economy through its expenditures on labour services and material inputs. We explore (through an application of input-output analysis) the economy-wide impacts of a reduction in UK alcohol consumption (through sales), which occurs either through a change in tastes or through an increase in alcohol tax.