Tobacco and gambling spending drains the UK economy far more than most people realise. Yet for years, industry lobbyists have warned that tighter regulations on tobacco, gambling and unhealthy foods would devastate jobs. New research from the University of Sheffield says the opposite is true.

A study published in the journal Addiction found that cutting consumer spending on tobacco and gambling, and redirecting that money to other goods and services, could deliver billions of pounds in economic gains and create tens of thousands of new jobs across the United Kingdom.

How Researchers Measured the Impact of Unhealthy Commodity Consumption

Researchers at the Sheffield Centre for Health and Related Research (SCHARR) built an open-source economic model called the Commercial Determinants of Health Input-Output (CDOHIO) model. It tracks how changes in unhealthy commodity consumption ripple through the UK economy.

The team used 2019 data from the UK Office for National Statistics. They simulated a 10% cut in consumer spending on tobacco, gambling, confectionary and alcohol. In each case, consumers redirected that money toward a typical mix of other products and services.

The results directly challenge the economic arguments industry groups have long used against public health policy.

Why Tobacco and Gambling Spending Drains the UK Economy

Not all consumer spending works the same way. Tobacco and gambling spending tends to leak out of the domestic economy at a far higher rate than most other goods.

For tobacco, a large share of revenues flows to international supply chains and global corporate headquarters. Very little stays within UK borders. Online gambling operators follow the same pattern, with many headquartered overseas.

When that same money goes toward goods and services with stronger domestic roots, such as food, retail, leisure or home improvements, a far greater proportion stays within the UK. It circulates through local businesses, supports jobs and generates tax revenue.

That is the economic mechanism the Sheffield team uncovered. Cutting unhealthy commodity consumption is not simply about spending less. It matters where the money goes next.

The Numbers: What a 10% Reduction in Tobacco and Gambling Spending Could Mean

The study measured the net effect of a 10% spending drop across four categories. Researchers accounted for direct, indirect and induced economic effects:

• Tobacco: A 10% cut in spending could boost UK Gross Value Added (GVA) by £1.86 billion and support more than 31,000 additional full-time jobs.
• Gambling: A 10% fall in gambling expenditure could deliver a £1.25 billion increase in GVA and create over 22,000 new jobs.
• Confectionary: Spending less on confectionary could add £389 million to GVA and support nearly 7,000 jobs.
• Alcohol: The picture is more mixed. Cutting off-trade alcohol spending (supermarkets and off-licences) would be economically positive, adding £2.54 billion to GVA. Cutting on-trade spending (pubs and restaurants) would reduce GVA by £2.68 billion, reflecting the outsized role hospitality plays as a domestic employer.

The overall economic case against reducing tobacco and gambling consumption simply does not hold up.

Even Tiny Shifts Away From Tobacco and Gambling Spending Help

The study also calculated what researchers call the “break-even” reallocation rate. This is the minimum share of savings that consumers need to redirect elsewhere for the economy to benefit overall.

For tobacco, that figure is just 4%. Even if 96 pence in every pound saved from reduced tobacco spending vanished from the economy completely, the UK would still come out ahead. That tells you how little value tobacco spending generates domestically in the first place.

For gambling, the break-even rate is 31%. For confectionary, it is 25%. Both are modest thresholds. Alcohol’s overall figure is 103%, but this is heavily skewed by the on-trade rate of 180%. The off-trade rate is just 1%.

The Real Benefit Is Likely Much Higher

The Sheffield researchers acknowledge their model understates the true economic benefit of cutting tobacco and gambling spending.

The CDOHIO model only measures demand-side changes: where consumers put their money. It does not capture the productivity gains that come from a healthier population. Reduced absenteeism, lower rates of presenteeism, fewer premature deaths and less pressure on the NHS all carry real economic weight.

One estimate put the wider economic cost of alcohol to England alone at £5.06 billion in 2021/22. Tobacco use and problem gambling carry similar costs. Any full economic assessment would almost certainly strengthen the case for policies that reduce unhealthy commodity consumption.

Lead author Dr Damon Morris, Research Fellow at SARG, put it plainly: “Industry groups often claim that public health measures will cost jobs and hurt the economy. Our research shows the opposite is true for tobacco, gambling and confectionary. When people stop spending on these harmful products, they buy other things, and that actually supports more jobs and generates more value for the UK than the original products did.”

What Reducing Tobacco and Gambling Spending Means for Public Health Policy

This research reaches well beyond academic modelling. The UK Government has recently introduced or consulted on a range of public health measures. These include restructuring of alcohol excise duties, increases to tobacco taxation, the Soft Drinks Industry Levy and a statutory levy on gambling operators.

Industry groups have pushed back on each of these, arguing that regulation costs jobs and undermines growth. This research gives policymakers a robust, evidence-based answer to those claims, at least for tobacco and gambling and for off-trade alcohol.

The CDOHIO model is open-source and applies to other countries too. Government agencies in the United States, across Europe and through the OECD publish equivalent input-output tables. Researchers in other countries could run the same analysis using the same method.

Economic assessments of public health policies that ignore how consumers reallocate freed-up spending consistently overstate the harm to industry and understate the wider benefit. Asking where the money goes next changes the picture entirely.

The Bottom Line

Reducing the UK’s reliance on tobacco and gambling spending is not the economic threat industry bodies claim. When people spend less on these products, they spend the money on something else. And that something else, the evidence shows, is considerably better for the British economy.

For policymakers weighing up the costs and benefits of public health regulation, that is a finding worth taking seriously.

Source: Morris D, Gillespie D, James M, Breeze P, Brennan A. “Modelling the economic effects of reducing the consumption of unhealthy commodities: An inter-sectoral input-output approach.” Addiction, 2026. https://doi.org/10.1111/add.70336

Source: dbrecoveryresources