The Scotch Whisky Association (SWA) said the UK chancellor’s decision to increase excise duty on spirits by nearly 4% or 36p a bottle in his Budget is a “major blow” to an important UK industry “undermining competitiveness at a time when the government should be supporting home-grown exporters.”

“As a result of today’s increase, the level of tax — excise duty and VAT — on an average priced bottle of Scotch Whisky is now an onerous 79%, one of the highest levels in Europe, and 21% higher than in 2010,” said the SWA.

“The excise duty burden on a 70cl bottle of Scotch is £8.05 and the total tax is £10.20.”

The SWA said it was time for a fundamental review of the alcohol duty system, describing the move as damaging to a major industry and at odds with the Prime Minister Theresa May’s words during a speech in Glasgow last week, where she described Scotch Whisky as “a truly great Scottish and British industry.”

The SWA said the Scotch industry supports 40,000 jobs across the UK and adds value of around £5 billion annually to the UK economy.

The SWA said the increase went against recent evidence that a duty cut boosts public finances.

“Following more supportive duty moves, revenue from spirits duty increased by 4.2%, or £132 million, to £3.25 billion in 2016,” the SWA said.

Julie Hesketh-Laird, Scotch Whisky Association acting chief executive, said: “A nearly 4% duty rise and a 79% tax burden on a bottle of whisky is a major blow, reversing recent progress.

“Distillers will find it hard to understand why the chancellor is penalising a strategically important British industry with this tax increase.

“At a time when government should be supporting a key home-grown sector, we face a damaging tax rise on top of the uncertainties of Brexit.

“Looking to the autumn Budget, we will be arguing strongly that it is time for a new approach to excise duty outside the constraints of EU excise law.

“The system is in need of a fundamental review and reform to make it fair and competitive.”