There Are Signs of Positivity For Marketers Despite Pre-Budget Jitters

While not quite the proverbial marmalade dropper, this week’s IPA Bellwether report provided sobering evidence of just how apprehensive marketers have become ahead of the Labour government’s first budget on 30 October.

The report, covering Q3, is the first to record marketing budgets failing to grow for the first time in 14 quarters, as marketers put spend on pause until they hear what tax rises businesses can expect (which will be allied with cuts to government spending). Moreover, uncertainty of what chancellor Rachel Reeves has in store has resulted in a deterioration towards company-own and industry-wide finances, with attitudes towards company-specific prospects turning negative after nearly two years of optimism.

So far, so gloomy. Nonetheless, there are positive signs - both economic and anecdotal, that are worth holding onto - the pause in marketing spending is likely to be just that, a pause.
 
For example, S&P Global Market Intelligence has upgraded its UK GDP growth forecast from 0.6 per cent to 1.2 per cent (it is estimated to have increased by 0.9 per cent in Q2 alone). Equally inflation has dropped at a higher level than was expected by the Bank of England, down to 1.7 per cent. This may result in a cut in interest rates, currently sitting at 5 per cent, and hopefully stimulate consumer spending ahead and into the Christmas retail period. S&P’s predictions for 2025 look equally promising, with advertising spend anticipated to pick up considerably next year, growing by 1.3 per cent.
 
From the conversations we are having with marketers, this confidence is well-placed. There is optimism that once the pain of budget day is over, businesses and individuals can again plan for the future.
 
While the negative hype surrounding the budget has created “choppy waters” for UK companies (as the IPA’s director general Paul Bainsfair points out), it shows how fragile British businesses are right now, and this bleeds through to consumer confidence too. With positive signs on the horizon, it’s important to talk the industry up. And if there’s one hope for the industry in the decade ahead, it’s that it learns to love again what it does and stride ahead with confidence. 

And the advertising community must remain positive during this period. As MullenLowe UK's chair Tom Knox reminded us last week when we wrote about concerns around the forthcoming budget: "The reason why optimism is so important to the economy is that it drives measurable consumer outcomes - optimism makes you move up the property ladder, optimism makes you buy a new car, go for that promotion. The advertising industry is 100 per cent the optimism promotion business."