WPP CEO Sir Martin Sorrell has been telling the UK’s Sunday Telegraph that this is not the time to panic and the troubled world economy will not slip back into recession although it faces “three years’ hard slog.”
In particular he says that the US, the current cause of ‘double dip’ recession fears, will evade that gruesome fate and the UK, which is showing all the signs of grinding to a halt, won’t.
He makes the point that UK public expenditure is still due to rise by £50bn or so over the next few years and, although that’s less than the last Labour government intended, it still constitutes an increase.
The danger here, although Sir Martin doesn’t mention it, is that panicky local authorities in the UK, who are charged with dispensing a big portion of public spending, will cut back harder than the Government intends them too.
But Sir Martin’s in a good position to take a balanced view of the world economy as WPP operates thousands of businesses in all the world’s markets, including the so-called BRICs (Brazil, Russia, india and China) and his ‘next 11’ (which includes South Africa and Vietnam) where he sees the most growth coming from.
He also reckons that cash-rich companies (Apple for example is sitting on $76bn of cash) will have to do something with it and that’s likely to be supporting their brands through advertising and marketing rather than opening new factories or doing big deals.
Let’s hope the Sage of Farm Street is right.