SHOPKEEPERS warned that tobacco smuggling would rise after the Chancellor hit smokers with a 20p-a-packet price hike.

They fear that if more people buy their cigarettes across the Channel, many will not be in business by the time Gordon Brown makes his next Budget speech.

Jim Ingram, a Whitstable retailer and South East spokesman for the Tobacco Alliance, said: "We are extremely disappointed with the Chancellor's decision to raise tobacco taxation in this year's Budget.

"Once again, the Government has provided a boost for criminal tobacco smugglers at the cost of small, independent shopkeepers up and down the country.

"Retailers' livelihoods are being put at risk, as is the much-valued 'open-all-hours' service we provide for our local communities. This increase will only invite more smuggling and leave shopkeepers facing an uncertain and bleak future.

"Undoubtedly, many will no longer be in business by the time of the next Budget.

"What we really needed was a cut in tobacco tax to bring prices here more into line with those in Europe -- that is the only way to stop the smuggling and safeguard the livelihood of legitimate retailers.

"Unless something is done to address the wide price differentials the black market in tobacco will continue to grow.

Independent research published last year showed that tobacco smuggling costs small independent shopkeepers over £50,000 a year in lost trade.