(Reuters) - British companies’ marketing budgets grew at their slowest rate in nearly two years in final quarter of 2017, partly reflecting uncertainty created by Brexit, a survey showed on Wednesday.
The IPA Bellwether report, conducted by IHS Markit, showed that 23.9 percent of marketing executives raised their budgets during the quarter but pressure to cut costs and protect profitability led to 15.2 percent of those surveyed cutting their marketing budgets.
The resulting net rise of 8.6 percent was lower than an increase 9.9 percent in the previous quarter and the lowest since the start of 2016, the report said.
Rising inflation - driven largely by the pound’s fall since Britain’s vote in 2016 to leave the European Union - has squeezed household incomes, causing broader economic growth to slow.
“The current trend in growth ... is nonetheless consistent with an economy undermined by ongoing Brexit uncertainty and an increasingly common ”wait-and-see“ attitude amongst businesses and consumers alike,” Paul Smith, Director at IHS Markit, said.
Smith said that companies had adopted a similar attitude towards their marketing budgets and were willing to spend on “perceived cost-value areas such as digital”, but not on traditionally bigger-ticket media campaigns.
Around 300 UK marketing professionals, primarily from Britain’s top 1,000 companies and across all key business sectors, were interviewed for the survey conducted by IHS Markit on behalf of the Institute of Practitioners in Advertising.
The report showed that Brexit remained a dominant theme for respondents, with a number concerned about the general uncertainty caused by the negotiations and how this may impact business and consumer confidence.
Some of those surveyed saw growth opportunities brought on by the vote, such as the potential for a boost to tourism from a weaker pound and more trade opportunities with markets outside Europe.
The survey found that growth in advertising spending is expected to be just 0.3 percent in 2018, hurt by pressure on consumer spend from falling wages, despite a boost from the football world cup during the summer.
But it also showed advertising budgets picking up in 2019 with a 0.7 percent rise and a 1 percent increase in 2020.
Reporting by Noor Zainab Hussain in Bengaluru. Editing by Jane Merriman