Reduced consumption of supermarket alcohol, tobacco, gambling, and confectionery would be unequivocally good for the UK economy
Dr Damon Morris – Research Fellow, Sheffield Addictions Research Group
New research has dealt a significant blow to the alcohol, tobacco, and gambling industries' core economic argument against regulation, finding that the sector's claims that reduced consumption would harm the economy and cost jobs do not stand up to scrutiny when the full picture of consumer spending is considered.
The study, by the Sheffield Addictions Research Group (SARG), modelled how a 10% reduction in consumer spending on alcohol, tobacco, gambling, and confectionery would flow to different sectors in the UK economy, finding significant benefits to the UK economy if spending moves to more productive industries.
This was particularly the case for spending on off-trade alcohol, tobacco, and gambling, as money spent on these industries often leaves the country – to global supply chains and international headquarters. Therefore, any reallocation of spending to other industries will keep more money in the UK economy and be a net positive. For on-trade alcohol, reductions in spending negatively impacted the UK economy.
The key findings were:
- Tobacco: A 10% drop in spending would boost the economy by £1.86 billion and create over 31,000 full-time jobs.
- Gambling: A 10% reduction would lead to a £1.25 billion boost and over 22,000 new jobs.
- Confectionery: A 10% reduction would result in a £389 million boost and almost 7,000 new jobs.
- Off-trade alcohol: A 10% reduction would boost the economy by £2.54 billion and almost 43,000 jobs.
- On-trade alcohol: A 10% reduction would lose the economy £2.68 billion and lose over 72,000 jobs.
So for alcohol, while spending less on alcohol in supermarkets was a significant net positive for the economy, spending less in pubs and restaurants had a negative impact, as hospitality is a major employer within the UK.
The modelling assumes that all of the money is reallocated to other industries and not saved. However, it found that even if 99% of the money that was not spent on alcohol was actually saved, and only 1% reallocated to other industries, the economic impact would breakeven (measured by Gross Value Added), highlighting just how unproductive money spent on supermarket alcohol is for the UK economy.
Similarly, 96% of the tobacco money would have to be saved and not reallocated to breakeven. For confectionery and gambling it was slightly lower, with 75% and 69% having to be saved to breakeven. Realistically, far less of the reduction in money spent would be saved, and far more would be spent on other products and services, showing an unequivocal net positive for the UK economy.
Joining this month’s podcast, lead author Dr Damon Morris explained why these economic benefits are almost certainly underestimates:
"by reducing consumption of these things we have a healthier population – so you'd expect fewer sick days from work, fewer people out of employment altogether because they're too ill to work, or out of work because of premature mortality."
He went on to explain that if the productivity gains from improved health were also included, it would show an even greater benefit to the UK economy.
The findings have clear implications for alcohol policy. Policies that target off-trade alcohol consumption – such as minimum unit pricing or increasing the duty differential between off- and on-trade products – would not only bring economic benefits by shifting spending to more productive sectors, but would also support the on-trade hospitality sector by making pub and restaurant drinking relatively more affordable by comparison. This matters for public health too: research consistently shows that the heaviest drinkers consume proportionally more in the off-trade, meaning policies targeting cheap supermarket alcohol are most likely to reach those whose drinking poses the greatest risk to their health.