UK firms increase ad budgets as recovery optimism grows

LONDON, April 17 Wed Apr 16, 2014 7:01pm EDT

LONDON, April 17 (Reuters) - The number of British companies increasing their marketing spend grew at its strongest pace in 14 years in the first quarter, signalling optimism that Britain's recovery from recession is gaining momentum, an industry survey showed on Thursday.

The IPA Bellwether report said a net balance of 20.4 percent of companies registered an increase in advertising budgets in the first quarter, against 11 percent in the fourth quarter, the biggest rise in spending since the survey began in 2000.

The numbers add to encouraging signs of a broad-based recovery in Britain's economy, which should return to full capacity by mid-2018, according to Office for Budget Responsibility.

The report also found that around 17.2 percent of companies saw a increase in budgets for the 2013/2014 financial year, compared with 13.5 percent the year before, the highest reading in seven years.

"Companies are ramping up their markets and advertising expenditure in the face of growing optimism about the economic outlook," said Markit economist Chris Williamson, who wrote the report.

"As higher marketing spend is also usually accompanied by rising business investment and job creation, this augurs well for economic growth to top 3 percent this year," he added.

Main media advertising budgets saw the biggest increase of 11.7 percent in the first quarter, following by internet advertising which rose 8.5 percent. Budgets for public relations, events and direct marketing also recorded increases.

The IPA Bellwether report was drawn up from a survey of 300 companies based in Britain. (Reporting by Li-mei Hoang; Editing by Mark Potter)

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