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NEWS12 July 2010

Bellwether points to ‘phase of slower growth’ for UK economy

UK

UK— The Institute of Practitioners in Advertising’s Bellwether has swung back into the negative with marketing budgets revised down in the second quarter and a warning that the UK economy is entering “a phase of slower growth”.

Almost 20% of the 300 companies surveyed said marketing spend had been adjusted downward in the April–June period, versus 15% who reported an increase – giving a net negative balance of 4.6%.

The net balance was positive last quarter at 4.5%, and Bellwether author Chris Williamson – an economist at financial information company Markit – said it was “disappointing” that the sector had failed to build on the return to growth seen at the start of 2010 after two-and-a-half years of decline.

“[This] highlights the fragility of the UK economic recovery,” said Williamson. “Companies are exercising increased caution in their expenditure in the face of likely slower economic growth in the second half of the year.”

Sales promotion budgets were the most widely cut in Q2, according to the Bellwether, while media spend and the ‘all other’ category – which encompasses research, PR and events – was also down, as it was in Q1.

Internet, search and direct marketing budgets were up on balance, and on a further positive note, Williamson said: “It is encouraging to see that marketing spend is still set to increase for the year as a whole compared to 2009, albeit to a lesser extent than signalled in the first quarter.”

Andy Viner, head of media for the Bellwether’s co-sponsor, the accountancy firm BDO, said: “Corporates remain focused on cost control against a backdrop of the risk of a double dip [recession].”

@RESEARCH LIVE

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