To ask Mr Chancellor of the Exchequer, when the elasticities used to model the UK spirits market for the purposes of spirits revenue projection were last updated; and when his Department next plans to review those elasticities.
20 November 2017
The elasticities used to model changes in revenue in the UK spirits market were last updated in December 2014. Full details of the elasticities and the methodology used to calculate them are included in the published working paper, which is available here: https://www.gov.uk/government/publications/estimation-of-price-elasticities-of-demand-for-alcohol-in-the-uk
The Office for Budget Responsibility do not publish the elasticities used within the alcohol duty forecasting models. However, these elasticities were last updated ahead of the March 2017 Economic and Fiscal Outlook. The OBR state in paragraph 4.76 on page 121 that they “have updated the econometric models of alcohol clearances that underpin the forecast” and therefore the elasticities behind the alcohol duty forecasting models. Full details of the March 2017 Economic and Fiscal Outlook can be found here: http://budgetresponsibility.org.uk/efo/economic-fiscal-outlook-march-2017/
All assumptions used for modelling are kept under review in consultation with the OBR.