THE Chancellor has cut excise duty on spirits by 2 per cent in a move warmly welcomed by the Scotch whisky industry.

As a result, the duty burden on a 70cl bottle of Scotch at the average price of £12.90 has been reduced by 16p from £7.90 to £7.74.

The total tax burden, including VAT, now stands at £9.89, or 77% of the average price of a bottle of Scotch, down from 78%, according to industry body the Scotch Whisky Association.

The cut followed intensive lobbying by the SWA.

David Frost, chief executive, said: "This is a historic decision and only the fourth time whisky duty has been cut in a century.

"The Chancellor's announcement will be toasted across the whisky industry and by consumers who are getting a fairer deal on tax when they have a drink of Scotch.

"The move is a major boost to our industry as we look to grow again in the UK, and equally sends out an important signal on fair taxation to our export markets.

"The industry is raising a glass to George Osborne and his Treasury team, as well as to all those who have supported our campaign over the last two decades."

Scottish Conservative leader Ruth Davidson said: "This is a significant announcement for the whisky industry in Scotland and will be a great boost to jobs and investment in the drinks sector.

"I've been campaigning for over a year, to reduce the tax on one of Scotland's most famous exports and I'm pleased to see the industry recognised in this way today.

"Last year a similar tax break worked well on beer, but this goes even further and will bring about significant benefits to a thriving Scottish drinks industry.

"I welcome this historic milestone and look forward to raising a glass this evening - probably a nice Highland Park to increased economic opportunity, both at home and abroad."

Meanwhile the Campaign for Real Ale welcome a third successive 1p cut in the price of pint.

CAMRA chief executive Tim Page said: "CAMRA is delighted with today's hat-trick of an unprecedented third consecutive cut in beer tax, with another penny of a pint, which will be welcomed by millions of beer-drinkers across the country. The last two cuts have already had a huge impact, saving over 1,000 pubs from closure and keeping the price of a pub pint down."

Drinks giant Diageo, which has a huge presence in Scotland, has also welcomed the cut in duty on spirits.

Andrew Cowan, managing director, Diageo Great Britain, said: "Thousands of people across the nation will this evening raise a happy toast to the Chancellor. The alcohol industry generates billions for the economy and flies the flag for the UK abroad. This cut will mean that a 400 year historic industry like Scotch whisky will remain a crucial, and vibrant, part of the British economy for many more years to come."