To spend, or not to spend? That will be question once again at the forefront of marketers’ minds this week, following on from Rachel Reeve’s first Labour budget in 14 years.

While Keir Starmer’s fledgling government certainly has a monumentally tough job on its hands after years of rocky Tory economics, on the surface – this budget appears to bode well for the UK public, promising to invest an extra £70 billion a year into the country.

The advertising and marketing industries have reacted cautiously to this pledge however, noting in particular the high tax burden, set to be amplified by a hike in employers’ national insurance contributions.

With the vast majority of marketing and advertising agencies in the UK qualifying as SMEs, many will struggle to absorb the related costs – and this may in turn lead to an unwanted reticence to recruit new staff, or promote existing employees.

Time and time again however, we have seen how companies who back themselves through tough times invariably end up in a better spot than their more frugal counterparts. Will this prove true once again? Only time will tell.

IPA director-general, Paul Bainsfair:

“Agencies are great growth engines and advertising spend has a multiplier effect on GDP. But the economics of agencies are dominated by payroll. The change to Employer National Insurance contributions represents a very significant increase in the cost base of agencies and threatens their ability to facilitate the growth the Government says it is prioritising.

“More broadly, agencies stand or fall on their talent. Moreover, shifts in employee rights, will significantly affect how agencies recruit, retain, and nurture the creative minds that are essential to our sector’s success.

“The Chancellor also announced increases in CGT and the tax paid on carried interest. We are concerned that this may lead to a reduction in appetite for investment in agency businesses, whether by individuals or by financial sponsors. We just have to hope that this short-term pain will, as the Chancellor suggested, ultimately unlock vital long-term growth for the UK economy.”

Born Ugly CEO, Sarah Dear:

“The budget is what I expected sadly, an attack on businesses many of whom are already facing huge burdens and struggling with challenges following Brexit and Covid. How much more can SME’s take is the question? One we’ll soon find out the answer too.

“What small businesses needed was for some of the weight to be lifted to allow them to fly and grow not to be weighed down with more financial burden. I hope this won’t happen but I fear we’ll see many going to the wall.”

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IAB UK head of policy and regulatory affairs, Christie Dennehy-Neil:

“The budget provides welcome clarity about the new Government’s plans, lifting some of the uncertainty that stalled marketing spend in Q3. It comes on the same day as the release of our Digital Adspend update for H1 2024, which shows that the total digital ad market grew 16% in the first half of the year, largely driven by investment in online video – up 26%.

“The fact that UK GDP grew by a far more conservative 0.5% during the same period indicates that marketers have continued to prioritise advertising despite the uncertain economy. While the tax rises announced today will increase pressure on business, the OBR is now predicting stronger economic growth in 2024 and 2025 and we expect advertisers’ confidence to remain buoyant, with social video in particular a key driver of ad market growth.”

You’re the Goods strategy lead, Darren Savage:

“Uncertainty is a decision killer. It makes the markets very nervous, which freezes investment, it makes consumers worry, so they tighten belts, and it makes brands put their foot on the ball to wait and see what happens.

“Post budget, the government now has the challenge of convincing people that their households will ultimately benefit financially, if successful, then consumer confidence, aligned with economic stimulus policies, will create the conditions for marketing investment to return strong returns.

“This will not happen overnight, as such brands need to be prepared for the returns on marketing spend to be delayed, but if they do invent, their returns will be far greater than those brands that keep their financial foot on the ball.”

Advertising Association CEO, Stephen Woodford: 

“The new Government repeated their aim today in the Budget to create the conditions for growth. It is important to recognise the vital role that advertising plays in supporting this, by helping businesses of all sizes to compete, innovate and support jobs. Put simply, investment in advertising is an investment in growth. The latest AA/WARC adspend figures demonstrate strong annual growth in UK adspend, well ahead of key European markets. The UK is also a leading exporter of advertising and marketing services around the world, another vital contributor to the future growth of our economy.

“The full Budget confirmed the Government will take steps to transform the Apprenticeship Levy into a Growth and Skills Levy, through £40 million investment. Much greater flexibility is something our sector and many others have long called for and we look forward to working with the Government to create more effective solutions for businesses looking to develop new talent in our industry.”

Experience director, Tom Crush:

“Whilst we understand and admire the Chancellor’s desire to plug the black hole (we all want better services and investment) – for agencies, employers’ NICS increases for even the most junior staff will of course make them hesitate when it comes to hiring and pay increases, which combined with the dwindling of agency fees will of course hit growth.

“Combined with a massive CGT hike, I think there will be more than a few agency owners asking “why us?”…At least we can console ourselves by getting a penny back on our overpriced London beers!”