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Latest UK IPA Bellwether Survey disappears down Rachel Reeves’ ‘black hole’

Usually, as Budget time approaches, chancellors reach down the back of the sofa and find a few billions they’d overlooked. Labour’s Rachel Reeves seems to find an ever-expanding black hole: claimed as £22bn when the Labour government came into office, now seemingly an even more daunting £40bn.

No wonder that the IPA’s latest Bellwether Survey into ad prospects has done a screeching handbrake turn after 14 quarters of rising optimism. Any CMO going to his boss and asking for budget increases in these circumstances would be hazarding their life expectancy.

The net balance of optimists against pessimists in this latest survey is there a big fat 0%, after record optimism in the previous quarter. A bright spot was so-called main media (ie non-digital advertising) with a second consecutive quarter of budget increases and the net balance climbing from +3.5% to +4.3%, indicating the strongest growth in a year. PR and events were strong too.

The future looks a little less grim. Growth in 2025 is expected to be similar, with 1.3% annual GDP expansion pencilled in, slightly above the 1.2% growth forecasted in the previous report. Advertising spend is expected to pick up next year, growing 1.3%. 2026 onwards should see GDP growth settle at the lower end of the 1% threshold, with adspend in real terms to rise at rates close to 2% in 2027 and beyond.

IPA director general Paul Bainsfair says: “Negative hype surrounding the impending Budget has no doubt created choppy waters for UK companies and their marketers to navigate.

“Looking to the positives, this quarter’s results reveal that companies aren’t cutting their marketing budgets; they are pressing pause until they know more about the Government’s economic plans. As clarity emerges, this may indeed prove to be a temporary dip in overall marketing spend rather than the start of a long-term downward trend.”

Bellwether author Joe Hayes, principal economist at S&P Global Market Intelligence, says: “After some bumper quarters for UK marketing spend, and a decade-high expansion in the last survey, the Q3 Bellwether report suggests that companies have dialled back their advertising activity levels. The result is disappointing and ends a strong sequence of growth, although perhaps it is more of a temporary step back as opposed to the start of a downward trend.

“One reason why this might be the case is the Autumn Budget, which is subject to much uncertainty about what new policies the government will announce. Fears of unfavourable taxation changes were frequently cited by panellists. Indeed, throughout the Bellwether survey’s long history, there have been several general elections, and history tells us that political uncertainty often weighs on decision-makers.”

Too right. Let’s hope that other bunch of incorrigible optimists the Bank of England’s Monetary Policy Committee reduce interest rates (inflation is now 1.7%, well below target.)

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