LONDON: The last quarter of 2007 saw UK companies revise their marketing budgets downward more steeply than at any time in the past two years, reveals the latest quarterly Bellwether Report produced for the Institute of Practitioners in Advertising.

Bellwether describes the cutbacks made in Q4 2007 as a "marked deterioration" in business confidence; it also warns that despite a positive start to 2008, marketing allocations for the year ahead are also likely to face cutbacks if there is no improvement in the UK economic outlook.

The report's author, Chris Williamson of NTC Economics, is not optimistic at the omens for 2008, although he believes it premature to assume that the Q4 2007 data indicate a watershed. "The first- quarter survey will be very indicative of how the year's going to pan out," he says.

Previous surveys, notes Williamson, have shown that marketing budgets tend to be reduced as the year progresses. Insofar as the current set of numbers is concerned, "we interpret this with caution".

Bellwether is based on information drawn from a panel of 250 senior marketers and is seen by many as an early snapshot of future economic trends

Nineteen per cent of informants divulged a downward revision to budgets in the period October-December 2007. And although 15% increased their budgets, Bellwether notes that the negative differential is the highest since Q1 2006.

As ever, web advertising remain robust, with just 7% of respondents reporting cutbacks versus 23% posting increases. Nonetheless, the net upward revision is the sector's most feeble in over four years - indicating that even the ebullient internet is sensitive to budget constrictions.

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Data sourced from Financial Times; additional content by WARC staff