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According to the Industry Trade Organization, UK advertisers have cut their budgets for the first time in four years as trade war prospects hold confidence in the global economy among major consumer brands.
The advertising budget was reduced in the first quarter of the year, the Advertising Practitioners Institute said Thursday as UK businesses curtailed spending due to fears of tariffs and concerns about weakening consumer trust.
Nearly a quarter of companies in IPA quarterly data reported cuts in marketing budgets, while only about a fifth said there was an increase. This has boosted the balance in favor of companies cutting advertising spending for the first time since the first quarter of 2021.
The IPA findings are the latest evidence of pullbacks among British companies as they tackle the sharp rise in labor costs announced last year in budgets and uncertainties sparked by the growing US trade war.
Marketing budgets are closely tied to business sentiment, and AD spending is considered an indicator of the economic outlook because of the number of businesses that budget based on expected sales.
“I understand that in the face of President Trump, more UK companies are frequently overturning political and economic norms and adopting them carefully,” IPA Director Paul Bainsfair said.
He also pointed to other issues that infuse business trust in the quarter, such as increased employers’ national insurance contributions and higher minimum wages.
The IPA said the difference between companies cutting and raising budgets is 4.8%, which is favorable to those who reduce their spending.
“The opening quarter of 2025 reported a significant decline in financial outlook, both at the company and industry-wide level,” the report said, adding that nearly a third of respondents felt unoptimistic about their performance in the first quarter compared to the past three months. The company’s trust has fallen to a low level since the last quarter of 2022.
“Where should I start? No one knows what the future holds,” said Samantha Smith, managing director of global marketing agency April 6 (Mobility) and IPA City Head in Bristol, Southwest and Wales.
The IPA has discovered that many marketing executives still hope that their advertising budget will grow year-round despite being cuts in the first quarter. More than a third of respondents expected an increase in total marketing budgets, roughly doubleping the percentage predicting a decline.
In the first quarter, direct marketing activities to consumers attracted the biggest increase in spending, followed by events and sales promotions. All media marketing budgets for home, audio and video have been reduced.
S&P Global Market Intelligence, which produced an IPA report, has reduced its UK economic growth forecast to 0.6%, in part, from 1%, in response to new US taxes on UK imports.
However, there were no changes to the advertising spending forecasts for 2025 and 2026, which increased by 1.3% and 1.8% respectively.
