According to the report by Oxford Economics 770,000 of the jobs are in the pub sector with 44 per cent of them occupied by the under 25s.
BBPA chief executive Brigid Simmonds said the fact that the industry also generated £10bn in direct tax in 2013 meant there was a 'compelling case' for a third cut in beer duty in the Budget.
“Our sector supports 870,000 vital jobs, and it is particularly important that we can go on boosting employment, especially for younger people," she said. "Two historic beer duty cuts have brought huge benefits. In 2014, beer sales rose, after years of decline, and employment was boosted by 16,000. The Chancellor has a great opportunity to build on this success in the Budget on 18th March, with a third duty cut.”
Writing in the report, Adrian Cooper, chief executive of Oxford Economics said the analysis confirmed that the pub and beer sector was an 'important source of employment and output at a national and local level.'
"Its activity generates a significant amount of tax contributions, investment and opportunities for young people to enter the labour market," he added.
The report follows another by Ernst & Young which claims that a 2 per cent drop in duty could boost public finances by £1.5bn this year and comes as the BBPA's latest Beer Barometer showed that beer sales were up for the first time in 10 years.
Although the growth was in the off-trade, total sales were up 1.3 per cent in 2014 with the on-trade seeing a decline of just 0.8 per cent, it's lowest drop since 1996.