Economic uncertainty halts UK marketing spend growth

UK marketing budgets ended 2025 on a neutral footing, as businesses paused investment amid economic uncertainty, according to the Q4 2025 IPA Bellwether Report, which shows total marketing spend flat after two consecutive quarters of growth.

The net balance for total marketing budgets stood at 0.0 percent in the final quarter of the year, down from plus 3.6 percent in Q3. A majority of surveyed companies, 57.4 percent, reported no change to budgets, while the remainder were evenly split between increases and cuts.

Economic pressure weighs on decisions

Bellwether respondents cited ongoing cost pressures, muted economic activity and internal budget constraints as key reasons for caution. The Autumn Budget was also identified as a drag on sentiment, alongside concerns around geopolitical tensions, policy uncertainty, US tariffs and fears of an AI-driven stock market bubble.

Paul Bainsfair, Director General, IPA : "This quarter’s flatlining of marketing spend reflects a wider confidence problem. Global instability continues to unsettle markets, while domestically there appears to be limited faith in the Government’s grip on the economy. Until that changes, caution is understandable. What we can say with confidence, however, is that those organisations which continue to invest in advertising, especially in a quieter market, stand to gain greater visibility and, over time, increased market share."

Where budgets were increased, businesses focused on strengthening their online presence and extending reach, reflecting the need to drive efficiency and measurable returns in a constrained environment.

Mixed picture across marketing categories

Of the seven categories tracked, PR and events were the only areas to record net growth in Q4. PR spend rose to a net balance of plus 3.5 percent, up from plus 2.5 percent in the previous quarter, while events fell sharply from plus 10.9 percent to plus 1.4 percent.

Main media and sales promotions both recorded flat budgets overall, with net balances of 0.0 percent.

Within main media, four of the five sub-categories registered declines. Out-of-home advertising saw the steepest fall, with a net balance of minus 17.6 percent, down from minus 15.2 percent in Q3. Audio followed at minus 10.2 percent, although this represented a smaller cut than in the previous quarter.

Published brands and video also moved into negative territory, while other online was the sole bright spot, rising sharply from a net balance of plus 2.1 percent to plus 13.2 percent.

Further cuts outside main media

Market research, direct marketing and the other category all recorded net reductions in spend during Q4. Market research came in at minus 4.0 percent, direct marketing at minus 4.3 percent and other at minus 12.8 percent, the steepest decline among all categories.

These figures underline a broad-based retrenchment beyond digital performance channels as businesses reassessed discretionary expenditure.

Cautious outlook for 2026/27

Initial budget plans for the 2026/27 financial year point to only marginal growth. A net balance of plus 1.7 percent of firms expect to increase total marketing spend, one of the weakest preliminary outlooks in the survey’s history.

Events are the only category forecast to grow, with a provisional net balance of plus 6.6 percent, albeit well below post-pandemic levels. All other categories are expected to see cuts, led by market research at minus 17.4 percent.

Sentiment around company financial prospects weakened significantly in Q4. The net balance fell to minus 19.0 percent, the most pessimistic reading in 13 quarters, with more than twice as many respondents feeling less optimistic than more optimistic.

At an industry level, pessimism also deepened, producing a net balance of minus 30.1 percent as concerns around growth and stability intensified.

Adspend outlook remains modestly positive

Despite the downbeat mood, adspend forecasts have edged higher. S&P Global Market Intelligence now expects UK adspend to rise by 1.5 percent in 2026, up from an earlier forecast of 1.2 percent, before stabilising at 2.3 percent growth from 2027 onwards.

This comes against a backdrop of downgraded GDP expectations for 2026, with growth revised from 1.1 percent to 0.8 percent, although anticipated interest rate cuts could support a gradual recovery.

Maryam Baluch, Economist, S&P Global Market Intelligence: "2025 closed on neutral footing, with marketing budgets holding firm throughout the quarter as businesses exercised caution around major events such as the Autumn Budget. As we move into 2026, the economic climate remains challenging, with marketeers under pressure to deliver ROI as firms scrutinise spending decisions more harshly. That said, budgetary stasis points to some resilience, with cutbacks avoided."

Mark Howley, Chief Operating Officer, Publicis Media: "The sentiment of the report reflects uncertainty and poor visibility of the year ahead. However, many businesses operate globally and are increasingly influenced by the stronger economic performance of the United States, which could drive greater optimism than the survey currently suggests."

www.ipa.co.uk

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