The report , published by the Institute of Practitioners in Advertising, shows a 0.6% upward revision in budgets in the final quarter of 2011, driven largely by online activity.

It does not provide a precise measure of trends in market research spending, as research is lumped into the ‘all other marketing’ category together with certain other activities including PR. However, this category saw by far the steepest decline in Q4: a 7.1% fall.

Confidence was down to the levels seen in the lead up to the financial crisis of 2008-2009. And for the first time in nearly three years, executives reported that their confidence in their own companies’ prospects had deteriorated.

“Given the close relationship between companies’ views over their financial health and their willingness to invest in marketing, the drop in business confidence… adds to growing uncertainty surrounding the future path of UK ad spend growth,” the report said.

However, report author Chris Williamson said:”It is encouraging to see that companies are planning to raise their marketing spend in 2012 despite seeing their financial prospects for the next three months falling to the worst since the height of the financial crisis in early 2009. It seems that many companies are looking to fight the prospects of a challenging year ahead with increased promotional activity.”