The 2% increase in tobacco tax announced in the 2009 Budget will make the UK even more attractive to smugglers, it has been claimed.

The hike has added 7p to a packet of 20 cigarettes, 3p to a packet of five cigars, and 7p to a 25g pack of tobacco.

Tobacco Manufacturers' Association chief executive Christopher Ogden said: "The tax increase will do nothing to reduce tobacco smuggling and cross-border shopping which lost the Treasury more than £4bn in revenue last year. The decision helps maintain the UK's position as one of the world's most profitable destinations for tobacco smugglers."

However, some comfort for legitimate retailers came with the news that the UK has joined the rest of the European Union in signing a 15-year anti-smuggling agreement.