Ireland's alcoholic drinks industry is braced for further tax rises in the Government's annual Budget, set to be announced tomorrow (7 April).

Drinks industry leaders anticipate a "hit" in tomorrow's Budget statement, but are hopeful that ministers will hold back on hammering the alcohol sector, for fear of causing further job losses and driving more consumers out of the Republic and into Northern Ireland, where drink is cheaper.

The Irish Government is arguably facing its toughest Budget since the founding of the Republic in 1949. Ireland's Gross Domestic Product shrank by 2.3% last year, its worst performance since records began in 1947, while investment consultancy Standard & Poor's last week downgraded Ireland's credit rating.

S&P predicted that the country's national debt could soar in the next few years. The drinks industry fears that it will become a target for ministers keen to cut the deficit.

Kieran Tobin, chairman of the Drinks Industry Group of Ireland (DIGI), told just-drinks today (6 April) that it would be "near suicidal" for the Government to "hit the industry hard".

He said: "If they do that, it will hit consumption futher and prompt more consumers to go to the north."

DIGI said last month that 2008 was the worst year in more than a quarter of century for Ireland's alcohol industry, with total consumption down 6%. Up to 9,000 jobs, roughly around one in ten industry workers, could be lost in 2009, the trade body believes.

Growing numbers of consumers are abandoning retailers in the north of the Republic to take advantage of cheaper drinks in Northern Ireland.

The difference in value added tax between the Republic (21.5%) and Northern Ireland (15%), which comes under the jurisdiction of the UK Treasury, is fuelling the growth in cross-border shopping, according to Tobin.