British firms' confidence falls, but marketing spend rises

[LONDON] The number of British companies feeling confident about their financial prospects fell to its lowest level since 2013, a survey showed, although the same firms still increased their marketing budgets, reflecting a mixed view of the economy.

The IPA Bellwether report said on Thursday that a net balance of 12.2 per cent of companies increased their advertising budgets in the second quarter of 2015, the eleventh successive quarter companies have reported growth.

However it also found only 25.3 per cent of companies reported feeling optimism about their financial prospects, compared to 37.8 per cent in the previous quarter, its lowest level in more than two years.

A similar trend was also recorded for wider industry financial prospects, with the net balance falling to a two-year low of 13.1 per cent, down from 26 percent in the previous quarter. "At the headline level, the Bellwether for Q2 2015 provided further positive news on marketing activity in the UK, with growth being extended to just short of three years and at a rate that remained historically strong," said Paul Smith, senior economist at Markit and author of the report. "Below the surface, however, the underlying drivers of growth are a little harder to read ... Whereas we see growth holding up in 2015 overall, the latest survey supports the projection of softer expansion further out." Marketing budgets were most focused towards events, which posted a rise in net balance of 7.4 per cent, but Internet budgets slowed to a two and half year low of 6.8 per cent.

The report said nearly all other categories recorded marginal growth, which included main media advertising, PR, market research and direct marketing.

The IPA Bellwether report was drawn up from a survey of 300 companies based in Britain.

REUTERS