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The UK will overtake Finland as the country with the highest wine taxes in Europe from Sunday. The change is seen as yet another blow to Britain's struggling pubs, while wine and spirits bosses warn that firms "have no choice but to increase prices" to stay afloat as an increase to alcohol duty comes into force.

Chancellor Rachel Reeves confirmed in November's Budget that alcohol duty would rise in line with Retail Prices Index (RPI) inflation. This means the tax charged on alcoholic drinks will increase by 3.66% from Sunday (February 1). A bottle of 14.5% alcohol by volume (ABV) red wine will see its duty increase by 14p under the changes.

The UK will have the highest duty rates in Europe for 14.5% wines, which would include many of the more full-bodied red wines like an Argentine Malbec, per The Telegraph.

The increased tax is directly levied upon alcohol producers but industry chiefs have warned there will be a "trickle down" effect to shoppers after witnessing a number of other cost increases in recent years.

Official data showed that the changes would see the duty on a typical bottle of gin, with 37.5% alcohol by volume (ABV), increase by 38p to £8.98, after VAT.

The UK Spirits Alliance, which represents hundreds of distillers across the UK, has written to the Chancellor urging her to use an upcoming duty review to drive growth, end "spirits discrimination" and put in place a long-term approach.

Alcohol duties are partly linked to the strength of drinks, with beer below 3.5% ABV paying a significantly lower level of tax following an overhaul of duties in 2023.

A number of beer brands, such as Foster's, have reduced their strength to 3.4% in recent months in a bid to reduce their duty costs.

The duty on beer will increase on drinks sold in both pubs and supermarkets, with pubs impacted for the first time since 2017.

Emma McClarkin, chief executive of the British Beer and Pub Association, said: "These changes unfortunately increase the likelihood of further price rises, which no brewer or publican would want to inflict on their customers.

"For brewers, who already pay some of the highest rates of beer duty in Europe, this increase will add further strain to their already razor-thin profit margins and risk one of the UK's world-renowned industries producing the greatest beers in the world."

Allen Simpson, chief executive of UKHospitality, said: "Hospitality businesses are facing price pressures at every turn and our sector's cost burden is growing at an unsustainable rate.

"Increases to alcohol duty, while not paid directly by operators, is another pressure, if it is passed on to businesses through higher drinks prices.

"We strongly urge suppliers to show restraint in doing so, recognising the economic pressure the sector is under."

It comes days after Ms Reeves reduced a controversial property tax raid on pubs which sparked outrage and saw Labour MPs barred from boozers across the country.

The Treasury announced pubs and music venues will get 15% off their business rates bills from April as part of a sweeping support package.

The Government had been warned that the changes, announced in the Budget, would lead to mass closures and job losses.

A Treasury spokesman said: "Alcohol duty plays an important role in ensuring public finances remain fair and strong and funds the public services people rely on every day."