The net balance for market research spend – which includes qualitative and quantitative, brand tracking, and product development research – was -3.1%, slightly up from -5.4% in the previous quarter, but the negative revision continues the trend of reduction since the third quarter of 2015.

While 14% of respondents said they had increased market research spend, almost 17% recorded reductions. Looking ahead, a net balance of -2.8% of marketers expect contractions to their market research budgets for 2018/19.  

Marketing budgets overall experienced their lowest recorded by the survey for two years, with a net balance of +5.0%, down from +8.6% in the previous quarter. Internet advertising, while the strongest performing category, at +8.7%, grew at the slowest rate recorded since 2015, and main media advertising recorded downward revisions, with a net balance of -2.1%.

Concerns surrounding Brexit negotiations remained dominant for survey respondents, with some concerned that the uncertainty around the UK’s departure from the EU is undermining marketing spend and leading to ‘belt-tightening’. The forthcoming implementation of the General Data Protection Regulation (GDPR) was also a concern, though some viewed the new regulations as an opportunity for brands.

Dr Paul Smith, director at IHS Markit and author of theBellwether Report, said:“The ongoing slowdown in marketing budget growth comes as little surprise in the context of the challenging business environment and disconnect in recent surveys between budgets and subdued financial prospects.

"Rising costs and the ongoing uncertainty that exists over the future direction of the UK economy in a post Brexit world have led to caution and belt-tightening across a number of sectors, especially those more exposed to retail and consumption.

“Despite losing clear momentum since last summer, the positive news is growth is being sustained meaning the longest bull-run in the survey history continues. Whether this can carry on remains to be seen. Although the latest survey shows anticipated growth in 2018/19, the degree of optimism is the lowest in five years.”