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Osborne warned of sugar tax impact on key sector

Irn-Bru commonwealthChancellor George Osborne has been urged to avoid damaging Scotland’s booming food and drink industry by imposing stiff taxes on sugar.

Martin Gill, head of accountancy firm BDO in Scotland, said the sector is performing strongly but is looking to the UK government to help continue that momentum.

“The proposed tax on sugar will have a huge impact on food and drink manufacturers and could dent the current performance of the sector,” he says.

“The Chancellor needs to be cautious in considering any additional taxation on sugar and ensure that he supports the food and drink sector in his Budget next month.”

New figures from BDO show the £11 billion a year turnover food and drink sector is seeking to expand in the near future due to rising business confidence, product innovation and investment in automation.

Commenting on this bullish tone, Gill says: “Pressures on pricing and margins remain hugely challenging, but the overall sentiment of the sector is a positive one.

“It’s been a tough few years for food and drink companies, but it appears they are strongly focusing on future growth.

“It is well known that the manufacturing sector plays a critical role in rebalancing the Scottish economy and driving long-term sustainable growth so it is essential that the sector receives all of the Scottish and UK government support possible.”

He adds: “One action which would aid the sector would be to increase the annual investment allowance to £5 million for five years in support of automation investment and introduce a temporary reduction in Employers’ National insurance for manufacturers to recruit the talent they need.”

BDO’s Food & Drink Report 2016, in association with the Institution of Mechanical Engineers, found that 79% of those surveyed are positive about the future of the industry, with 86% of firms expecting revenue growth of up to 20% in the next year.

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