The French government has said it will not be increasing taxes on wine following significant opposition to the proposed increase from both within and without the country's wine industry.

Reports emerged earlier this week that the government was considering a new €0.05 per bottle levy, with the aim of raising €800m to go towards plugging a gap in France's healthcare budget, part of an overall €10 billion hole in the country's welfare budget.

A government spokesman said unequivocally yesterday that there would not be a tax increase on wine.

The news was welcomed by wine industry officials. "It would have been a huge mistake to increase taxes at a time when we are already struggling with fierce competition from abroad," said Eric Tesson at the CNAOC confederation of wine producers. "We're happy they've given up the plans."