Drinkers are celebrating the news that duties on beer, wine and spirits have been frozen in the Budget.

Chancellor Gordon Brown said: "There will be no tax rise on alcohol this side of the millennium."

However smokers have again been hit in the pocket.

There will be an extra 17.5p tax on a packet of 20 cigarettes. This is in line with the government's commitment to increase tobacco duty by 5% above inflation every year.

Mr Brown also announced that extra resources will be targeted to combat the smuggling of alcohol and cigarettes into the UK.

However, the alcohol and tobacco industries accused the chancellor of missing an opportunity to tackle the problem which costs the Treasury an estimated �2bn a year in lost revenues.

Both had lobbied for duties to be cut to reduce the profits which can be made by smuggling from countries where taxes on cigarettes and drink are lower.

'Smugglers rubbing their hands'

The Tobacco Manufacturers' Association said the Budget changes would widen the price gap, increasing the incentives for the bootleggers.

It calculated that on average 20 cigarettes would now cost �3.82 in the UK compared with �1.98 for a similar pack in France.

Campaigners say the tax rise will discourage smoking

Ian Birks, the Head of Corporate Affairs for cigarette manufacturer, Gallaher's, said: "The smugglers are rubbing their hands with glee and the country is increasingly awash with cigarettes from overseas, so much so that smoking is actually increasing for the first time in living memory.

"As government policy is not working, it needs to be changed and the sooner, the better."

However, anti-smoking campaigners welcomed the tax hike.

Clive Bates, the Director of Action on Smoking and Health (Ash) said: "When cigarette prices rise tobacco consumption falls as smokers cut down, give up or never start in response to the price."

Ash estimates the increase will result in a drop in tobacco consumption by about 1.6%, cutting premature deaths by about 1,300 a year in the long term.

Whisky galore overseas

Whisky makers want duties equalised with those abroad

The Scotch Whisky Association said its members were disappointed that taxes on their product had not been cut to help reverse falling UK sales.

"We are very disappointed because the chancellor has ignored the problems we are facing," said a spokesman. It had been hoping for a cut of 26p on a bottle.

"There has been a drop in the UK market of around 7% in the main because shoppers are going overseas to France to buy cheaper whisky."

Your Views - Have your say on the Budget