CHANCELLOR of the Exchequer Jeremy Hunt today declared the UK would avoid falling into recession this year, but Scottish tourism chiefs have warned the decision to press ahead with the rise in corporation tax “will be a burden too heavy to bear for many”.

And today’s Budget has been slammed for its “glaring” lack of support for small firms, as distillers branded the decision to hike Scotch whisky duty by 10.1 per cent as a “historic blow”.

Marc Crothall, chief executive of the Scottish Tourism Alliance, declared that the rise in corporation tax to 25% from 19% in April “will be met with real concern and anxiety by many.”

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Mr Crothall said: “A significant number of businesses within Scotland’s tourism sector are currently on a cliff edge with the continuing rise in the costs of doing business, taxation and impact of the cost-of-living crisis.  Revenue is down, costs are up and inward investment is impossible; survival is looking bleak. 

"The increase in corporation tax will be a burden too heavy to bear for many, which will end up costing the UK Government more in terms of lost tax revenue."

Martin McTague, national chair of the Federation of Small Businesses, said: “The Chancellor has set high expectations for supporting small firms during these challenging times, but today’s Budget will leave many feeling short-changed.

"The distinct lack of new support in core areas proves that small firms are overlooked and undervalued. Budgets are about tough choices, and with today’s billions being allocated to big businesses and households, 5.5 million small businesses and the 16 million people who work for them will be wondering why the choice has been made to overlook them.”

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Mr McTague added: “We’ve got a Budget that on energy helps households but not small firms. On business taxes, it spends £27 billion extra on big businesses, arguing that small businesses are already catered for. This will leave to a feeling of being left behind instead of being considered equal partners in economic recovery - trickledown economics here simply does not work.”

The Scotch Whisky Association said the decision to increase duty on whisky would fuel inflation, dent consumer confidence, and add to pressures in the hospitality industry.

Chief executive Mark Kent said: “This is an historic blow to the Scotch whisky industry. The largest tax increase for decades means that 75% of the average priced bottle of Scotch Whisky will be collected in tax, reducing already tight margins for an industry which employs tens of thousands of people and invests hundreds of millions annually across the UK."

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Mr Kent was also critical of the move by Mr Hunt to extend draught relief for pubs via the so-called Brexit Pubs Guarantee, saying it would disadvantage spirits producers "by giving additional tax breaks which are not available to the vast majority of distillers."

He said: "Spirits account for more than a third of hospitality sales, but the extension of ‘draught relief’ cuts out 99% of the spirits sector, alienating both producers and consumers who choose premium quality drinks.

“We have been clear with the UK Government that increasing duty would be the wrong decision at the wrong time, so it is deeply disappointing that one of Scotland’s largest and longest-standing industries has been treated in this way."