Our Group CEO, Patrick Reid, shares his thoughts on the Q3 2020 Bellwether Report as UK marketing budgets continue to contract amid impact of COVID-19.
From the IPA Bellwether Report:
The COVID-19 outbreak and resulting restrictions on businesses have led IHS Markit, the Bellwether authors, to forecast steep declines for a number of key economic indicators during 2020. Following temporary closures for many firms during the second quarter of the year, as well as ongoing capacity constraints due to social distancing measures, it foresees a -11.2% contraction in GDP during 2020 as a whole. The threat of a widespread second wave of infections also poses a significant downside risk to this forecast. A further sharp increase in case numbers could lead to a fresh lockdown and additional economic hardship unaccounted for by our current estimate.
Assuming restrictions remain at their current level of stringency, it foresees a -13.2% reduction in consumer spending and a -20.0% decline in business investment during 2020. These figures correspond to a Bellwether forecast of a -23.3% fall in adspending for the year as a whole.
Looking forward, IHS Markit anticipates a robust recovery in economic conditions during 2021, as firms continue to adapt to a ‘new normal’. This would translate to a +4.6% expansion in GDP and a Bellwether forecast of a +11.3% rise in adspending during 2021, followed by a steady trend towards long-term growth rates. These outcomes, however, hinge largely on positive outcomes regarding the evolution of the pandemic and the development of Brexit negotiations before the end of the transition period at the end of this year.