The economist's view

Alcohol consumption per head of population increased 48 per cent between the economic doldrums of 1986 and 2006, when Irish consumers were merrily riding the crest of the boom, and increased affluence is often cited as the reason for the staggering 523 per cent increase in wine sales since 1986.

But it is hard to disentangle the economic reasons people do or don't drink from the social and cultural ones, according to Austin Hughes, chief economist at IIB Bank.

"If it is true that price has some impact, you might expect to see a fall in consumption at times when consumer sentiment is declining, [ as it is now]," he says.

"The problem with the Government's policy on alcohol excise duty is that it tends to have a stop-start approach."

Drinkers quickly absorb the price increases, while the one-off tax increases can have a harmful effect on inflation and revenues.

"For my money, a small increase in duty would be no harm, provided you offset it by giving income tax cuts and welfare increases, so the money either goes to fund health or is used to encourage people to reallocate their spending elsewhere," he says.

But the Government's policy needs to be coherent, he adds.

So far, it has used excise duty purely as a means of raising revenue, not for social policy reasons, according to Dr Joe Barry, specialist in public health at the HSE.

Alan McQuaid, economist at Bloxham Stockbrokers, thinks Ireland's high inflation rate, currently sitting at 4.8 per cent, means Brian Cowen won't touch excise duty on alcohol in December. McQuaid believes drinkers are now as health-conscious as they are price-conscious when it comes to how much they choose to drink.

"I think consumption will decline irrespective of what happens with taxes."