UK advertising sector faces recession in the event of a no-deal Brexit
The UK advertising sector could suffer its first recession since 2009 in the event of a no-deal Brexit, a new report has warned.
Research by Enders Analysis estimates ad spend in 2019 would fall three per cent if the UK leaves the EU without an agreement in place. The decline would be the worst in recent years, but not as severe as the 13 per cent decline a decade ago.
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Display advertising would be hardest hit in the event of a no-deal Brexit, falling 5.3 per cent. Overall, the decline would wipe £1.36bn off the market.
Enders said its central case, an orderly withdrawal from the EU, would see total advertising spend grow by 2.7 per cent, lagging behind the estimated 4.7 per cent growth last year.
But this growth is driven by so-called pure play advertisers such as Google and Facebook, with the figures masking consumer weakness and declines in TV and print advertising, the report said.
Changing consumer habits, driven by the rise of online video streaming, is set to hit TV ad spend, which is forecast to fall 2.9 per cent in 2019. This figure would increase to a 9.3 per cent drop in the event of a no-deal Brexit.
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“The advertiser response will be to become more tactical in allocating advertising spend, but evidence from the last recession suggests that ‘going dark’ with brand display spend can be a long-lasting mistake,” the report said.
Stephen Woodford, chief executive of the Advertising Association, said: “The UK is the global hub for advertising and the industry contributes £132bn to British GDP, but growth is dependent on ensuring an orderly and negotiated withdrawal from the EU that minimises uncertainty for business in the weeks and months ahead.”