The head of the world’s largest advertising agency has warned that the general election is likely to “crimp the strong UK economy” no matter which party wins, because people will be forced to decide between a referendum on European membership and a “business-bashing” agenda.
Sir Martin Sorrell, the chief executive of WPP, said that the electorate faced a “Morton’s Fork” between voting on whether to remain in Europe, if it backed the Conservatives, or Labour’s anti-business rhetoric, which would create uncertainty for large companies looking to invest.
Speaking as he reported slightly faster growth in WPP’s British business, at 15 per cent, he said he was braced for growth to slow because “uncertainty can crimp a strong economy”.
He said that Britain looked set to “slip into the political cycle again” after the election. “If the Conservatives win outright (unlikely?) or even form a minority government, there will be a referendum on the EU in 2016 or 2017, which will cause significant uncertainty.
“If Labour wins outright (also unlikely?) or leads a coalition (more likely with the SNP?) or forms a minority government, it will win partly on a “bashing business” manifesto, which may resonate at the ballot box. All seems a case of ‘Morton’s Fork,’ ” Sir Martin said.
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A Morton’s Fork is a logical dilemma where both outcomes are unpalatable. The term, named after John Morton, who had a controversial means of justifying his tax-collecting tactics when he was Archbishop of Canterbury from 1486 to 1500, is the latest to be adopted by Sir Martin to describe his outlook for the economy.
WPP achieved its target to pay out 45 per cent of its cash in dividends in 2014 a year ahead of schedule and could raise that level to 50 per cent, according to Sir Martin. It raised its payout by 12 per cent in 2014 to 38.2p. The company has also retuned its bonus schemes for the myriad companies that it owns to more closely align incentives to the performance of the overall WPP business, not the individual unit.
Sir Martin said that profit broke £1.5 billion for the first time in 2014, although it fell short after stripping out currency fluctuations and one-off items. Pre-tax profit rose 12 per cent to £1.45 billion and revenue was up 4.6 per cent to £11.5 billion.
WPP shares rose 18p to close at £15.59 last night.