By Tom Gordon

Political Editor

JEREMY Hunt has infuriated the Scotch whisky industry with his first Budget, raising alcohol duty by more than 10 per cent, against the wishes of Cabinet colleagues.

Distillers said the hike was an “historic blow” that would see three-quarters of the cost of an average bottle going to the taxman.

Scottish Secretary Alister Jack admitted he had lobbied against the alcohol change in vain.

He said: “Did I lobby against it? Yes I did. Did I lobby against it the last few years successfully? Yes. But this time the lobbying hasn’t been successful.”

Asked if he wanted to apologise to the industry, he said it was a “matter of regret” that whisky duty was going up, adding: “It’s not what I wanted for the Scottish industry.”

The Chancellor confirmed the move as he set out plans to boost the economy and urge more people into work, buoyed by a £25 billion improvement in public finances.

Mr Hunt told MPs the Office for Budget Responsibility (OBR) had upgraded its grim forecasts from November, and no longer predicted there would be a recession in 2023, although the economy is set to shrink by 0.2% instead of the 1.4% feared. Inflation should fall from 10.7 to 2.9% this year.

With Tory MPs regarding an economic turnaround as their best faint hope to avoid defeat in the General Election, Mr Hunt was loudly cheered by his own side.

He drew a noisy response from the SNP benches at one point, too, after declaring “independence is always better than dependence” in relation to finding work.

As delighted Nationalists hooted and jeered, he added unhappily, “with some exceptions”.

In a bid to enlarge the workforce, he announced more free childcare for working parents in England, tighter benefit sanctions for those who refuse to take a job, and more help for the disabled and those with health problems to work without fear of losing benefits. To encourage high-earners, notably doctors who took early retirement, back into work, the £1 million lifetime allowance for tax-free pensions was abolished, and the annual allowance raised from £40,000 to £60,000.

The childcare changes will not apply in Scotland, but mean more funding for Holyrood, potentially allowing it to follow suit.

Despite misgivings among many Tories, Mr Hunt pushed on with a rise in corporation tax from 19% to 25%, the highest burden as a slice of GDP since it began in 1965.

To offset it, he also introduced tax breaks for business investment worth up to £9bn a year.

Mr Hunt said the sunnier prospects for the economy were “proving the doubters wrong”.

He said he was tackling “the two biggest barriers that stop businesses growing - investment incentives and labour supply”, adding: “Today we build for the future with inflation down, debt falling and growth up. The declinists are wrong and the optimists are right.”

But his message was undercut by turmoil in the financial markets over fears of a banking crisis triggering recession. The FTSE 100 fell 3.8%, its biggest one-day drop since Russia invaded Ukraine.

European stock exchanges also tumbled, as shares in Credit Suisse slumped by almost a third, forcing the Swiss National Bank to intervene. Markets have been on edge since Silicon Valley Bank collapsed in the US last week.

The OBR also said real household disposable income per person would fall by 5.7 per cent over 2022/23 and 2023/24, less than predicted in the autumn, but still the biggest two year fall since record began almost 70 years ago. It means real living standards will be 0.4 per cent lower in 2027/28 than before the pandemic.

Full story: Pages 6-7