UK Advertising Association Cuts 2017 Growth Estimate

By Rory Gallivan Features Dow Jones Newswires

The U.K.'s Advertising Association reduced its estimate for growth in advertising expenditure in 2017 as spending is held back by higher inflation after the Brexit vote and lower business confidence following the indecisive general-election result.

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The AA said Thursday it now expects U.K. advertising expenditure to grow by 2% over the full year, down from a previous estimate of 2.5%.

The revision comes as the AA reported growth of 1.3% in the first quarter of calendar year 2017, the slowest rate in more than four years.

James McDonald, an analyst at the World Advertising Research Center, which helped compile the figures, said supermarkets reined in TV advertising spending as higher inflation and slow wage growth have squeezed consumer spending.

Inflation has risen in part due to the fall in the pound against other currencies following the vote for the U.K. to leave the E.U. in June last year. Uncertainty increased last month when the governing Conservative Party lost its majority in a general election.

TV advertising fell by 6.2% in the first quarter, the first decline since 2009, the AA said. The AA report echoes comments by the U.K.'s main commercial TV network ITV PLC (ITV.LN), which Wednesday reported a fall in half-year pretax profit and said that retail, finance and food advertising has been hit by economic uncertainty and inflationary pressure.

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The AA predicts advertising expenditure growth should pick up to 2.6% in 2018, driven by the soccer World Cup and a likely increased certainty about the terms of Brexit.

Write to Rory Gallivan at rory.gallivan@wsj.com; Twitter: @RoryGallivan

(END) Dow Jones Newswires

July 26, 2017 19:15 ET (23:15 GMT)