Bellwether now forecasts -0.2% growth for 2016 and -1.3% for 2017 and this is the first time since 2013 that it has predicted declining spend. Before the second quarter, Bellwether had forecast +3.3% growth for 2016 and +2.7% for 2017.
This reflects not just concerns about the consequences of the UK's historic decision, but also a growing level of pessimism among panel respondents about wider industry prospects that most reported on before the referendum vote itself.
A record 68% of marketers signalled a freeze to their budgets over the quarter while sentiment regarding industry financial prospects dropped to the lowest level in 13 quarters, from -6.5% in Q1 to -8.1% in Q2.
Meanwhile, confidence regarding their own financial prospects at +13.7% remained little changed on the 13-quarter low of +13.6% in Q1 2016.
However, on a more positive note, the report showed a net balance of +10.7% of companies reporting an increase to their budgets over Q2 2016 – up from +3.0% in Q1 and the highest reading for a year.
Marketing budgets rose significantly for events, which saw a record net balance of +13.4%, up from +6.3% in Q1, and for main media (+9.3% in Q2 from +1.7% in Q1).
Internet marketing budgets grew to register a net balance of +10.9%, up from +9.8%, while PR and 'other' also saw upward revisions of +2.3% and +1.2% respectively.
Paul Smith, Senior Economist at Markit and author of the Bellwether Report, said marketing executives were enjoying success in raising their budgets in the run-up to the EU referendum, but an increased proportion indicated a freeze over the past three months.
He said this implied that Brexit uncertainty was already impacting on decision-making and the setting of budgets and that the referendum result is very likely to make itself felt across the industry.
"With Brexit now more likely to happen – and the widespread belief that the UK will subsequently experience a period of sustained economic turbulence – marketing executives, their budgets and the wider industry inevitably seem set for a challenging period in the months ahead."
Data sourced from IPA; additional content from Warc staff