British companies have slashed their advertising budgets for the first time in four years, reflecting growing concerns over trade tensions, rising costs and a faltering economic outlook.
According to new data from the Institute of Practitioners in Advertising (IPA), nearly a quarter of businesses reported cutting their marketing spend in the first quarter of 2025, outweighing the fifth who increased it. The net result – a 4.8 per cent dip in overall advertising investment – marks the sector’s first contraction since early 2021.
Several factors have caused the dip
The downturn comes as many UK businesses face a perfect storm: global economic jitters, the rising threat of US tariffs on British imports, and domestic pressures from last year’s Budget, which hiked national insurance contributions and raised the minimum wage.
“President Trump’s unpredictability is making many UK firms adopt a ‘wait and see’ strategy,” said Paul Bainsfair, director-general of the IPA. “There’s a clear sense of caution – and it’s being felt most sharply in main media budgets.”
Advertising spend is often viewed as a leading indicator of economic confidence, with businesses typically setting budgets in line with sales expectations. The IPA report noted that business sentiment fell to its lowest point since late 2022, with almost a third of respondents less optimistic about their future performance than just three months prior.
Widespread uncertainty across businesses
Samantha Smith, managing director at April Six (Mobility) and IPA city head for the South West, summed up the mood: “There’s a lot of CFOs hovering over the budget cut button. No one knows where things are heading – and if they say they do, it’ll probably change by tomorrow.”
Despite the downturn, some areas of marketing spend showed resilience. Direct-to-consumer campaigns and event-based marketing saw increases, suggesting brands are focusing more on short-term engagement and sales promotion. Meanwhile, traditional media – including out-of-home, audio and video – saw their budgets trimmed.
Many analysts have cut UK growth forecasts
Market analysts at S&P Global have cut their UK growth forecast to 0.6 per cent this year, down from 1 per cent, citing the ripple effects of the US-UK tariff spat. Yet they’ve kept their projections for advertising spend growth in 2025 and 2026 intact, predicting modest increases of 1.3 and 1.8 per cent respectively.
For now, the message is clear: confidence is fragile, and marketers are keeping their powder dry – at least until the economic dust settles.
