THE Scotch whisky industry is continuing to grow its contribution to the UK economy - despite Brexit and the high levels of duty rates applied to the sector.

The sector’s gross value added (GVA) has expanded by 10 per cent to £5.5 billion since 2016, a new study has found, as Scotland’s national drink continues to grow in popularity in overseas markets.

Growing exports, which climbed by 7.8 per cent to £4.7 billion in 2018, has spurred investment in new distilleries and projects to bring mothballed sites back into production, including moves by Diageo to revive Port Ellen on Islay and Brora in Sutherland. And increasing sums are being spent to enhance distillery visitor centres around the country.

The investment comes in spite of continuing uncertainty around Brexit and Scotch distillers paying the fourth-highest duty rates in the European Union, according to the Scotch Whisky Association (SWA).

The SWA, whose report builds on research carried out by the Centre for Economic and Business Research (CEBR), said that the industry generates two-thirds of all spirits GVA in the UK. Its calculation of GVA is based on the sum of sector turnover and total remuneration of employees, net of taxes and subsidies on production.

SWA chief executive Karen Betts said: “This research shows the Scotch whisky industry’s huge contribution to both the Scottish and UK economies.

“Significantly, the research shows that our industry’s GVA increased by 10% to £5.5bn between 2016 and 2018, as a result of Scotch whisky companies’ continued export success and the industry’s consistent investment at home – with over £500 million going into production, distribution, marketing and tourism in the last five years.

“Despite the challenges of Brexit, this investment continues to flow, with further projects planned and more distilleries set to open – a sign that the Scotch whisky industry remains confident about the future. This is great news for our many employees, our investors, our supply chain and, of course, for consumers all over the world who love Scotch.”

The association, which represents the country’s major distillers, said its findings underline the benefit brought to the industry by action by the UK Government to freeze spirits duty in recent years.

Ms Betts, who became the SWA’s first female chief executive when she succeeded David Frost in 2017, declared that the Edinburgh-based organisation would continue to lobby for “fairer treatment”. The former UK ambassador to Morocco said: “This report also highlights the high rate of domestic tax that Scotch Whisky faces in the UK. In the US, Scotch and other whiskies are taxed at just 27% of the rate that HM Treasury taxes us here at home. We will continue to press the Chancellor for fairer treatment for Scotch whisky in our domestic market, which reflects the vital economic contribution the industry makes to the UK economy every day.”