FILE PHOTO: A woman carries shopping in a plastic bag, in London, Britain December 27, 2018. REUTERS/Henry Nicholls
January 16, 2019
By Noor Zainab Hussain
(Reuters) – A six-year run of marketing spending growth at British companies ended in the final quarter of 2018 as uncertainty over Britain’s impending exit from the European Union led companies to clamp down on costs, a survey showed on Wednesday.
The IPA Bellwether survey, conducted by IHS Markit, showed that 16.4 percent of marketing executives raised their budgets during the fourth quarter but the same percentage of executives who took part in the survey cut their marketing budgets.
British lawmakers defeated Prime Minister Theresa May’s Brexit divorce deal by a crushing margin on Tuesday, triggering political chaos that could lead to a disorderly exit from the EU or even to a reversal of the 2016 decision to leave.
Political and economic uncertainty caused by a drawn-out Brexit negotiation process has dampened both business and consumer confidence, driving belt-tightening and restricting resources available to marketing executives, the survey showed.
“Company-wide indecisiveness restricted the allocation of resources to marketers, as the wait-and-see approach to how the Brexit process will transpire appears to be the current strategy in place for many UK businesses,” said Joe Hayes, economist at IHS Markit.
The survey also flagged that for the first time since 2012 companies were unsure or not feeling upbeat about their own financial prospects, suggesting that plans to protect margins were leading marketing executives to curtail spending.
Compounding problems, consumer spending in Britain fell at its fastest annual rate in eight months in December, reflecting weaker economic confidence as the country moved nearer to Brexit, Visa payment card data showed.
Graphic: UK GDP – https://tmsnrt.rs/2ANHtjz
“Provisional data for budgets for the coming 2019/20 financial year indicate that the downbeat stance seems likely to persist,” Hayes said.
The IPA Bellwether survey also found that advertising spending is expected to rise 0.5 percent in 2018, lower than a previous estimate of 1.1 percent.
“Nonetheless, some foresee short-run opportunities from the (Brexit) uncertainty, with stockpiling efforts helping drive business in manufacturing industries,” the survey report said.
Around 300 UK marketing professionals, primarily from Britain’s top 1,000 companies and across all key business sectors, were interviewed for the survey.
Graphic: British consumer confidence hurt by looming Brexit – https://tmsnrt.rs/2ANGT5n
(Reporting by Noor Zainab Hussain and Samantha Machado in Bengaluru; Editing by Shounak Dasgupta/Keith Weir)