Sir Martin Sorrell has stuck by his grim predictions for Britain after Brexit despite business picking up for his advertising company WPP since the vote to leave the EU.
Sorrell was one of the leading business voices campaigning for Britain to stay in the EU. Shortly before the vote on 23 June he warned the UK was in danger of sleepwalking into a black hole that would damage economic growth.
WPP, the world’s biggest marketing services company, said its UK business performed better in July, possibly helped by the falling pound, after slowing in run-up to the referendum. Recent economic data on exports, the housing market and supermarket sales have also suggested the economy is holding up after the vote.
Sorrell said: “As far as the UK is concerned, we saw some softness in April, May and June and in July we saw some strength so it’s difficult to come to a conclusion one way or the other. It’s only one month and one swallow doesn’t make a spring.
“I wasn’t surprised by it [the business improvement]. I was pleased by it but it’s just too early to judge. What I stick by is that the next two or three years are going to be a very uncertain time. In the longer term what business wants is certainty but the government can’t deliver certainty because it wants more flexibility in its negotiations.”
He said lack of clarity over when the government triggers Britain’s departure from the EU by invoking Article 50 was at the heart of uncertainty for business leaders.
“Whenever it is, it’s going to be a long process and we’ve outsourced our trade negotiating facility to Brussels. It’s going to be expensive and take a long time to build it back up.”
At WPP’s annual meeting in early June Sorrell said Brexit would be bad for the company and would have a serious impact on its business in Europe. He said WPP would need more businesses on the ground in major European countries such as Spain, Germany and France.
“I was worried about losing influence in Europe. We have made acquisitions in Belgium and France already and we will be doing more.”
WPP reported headline profits up 10% to £769m and global revenues of £6.5bn in the six months to the end of June. It reported healthy growth in the second quarter but business slowed in the UK, which makes up almost 14% of its revenues, as advertisers held back spending over concerns ahead of the Brexit vote.
Global net sales rose 3.8% to £5.6bn in the first half as the company was boosted by advertising spend associated with Euro 2016, the Rio Olympics and the looming US presidential election.
WPP’s £726m in second-quarter revenues from western continental Europe represented 6.2% like-for-like growth, up on the 4.4% reported in the first quarter.
“Whilst there seems limited likelihood of a worldwide recession, that is two quarters of negative GDP growth globally, there have been and will be individual countries that go into recession, as Russia and Brazil already have and a post-Brexit United Kingdom might,” WPP said.
