The head of the world’s largest advertising agency has warned that the impending general election is likely to “crimp the strong UK economy” with the electorate facing a “Morton’s Fork” between a referendum on Europe if they vote for the Conservatives or a “business-bashing” approach by the Labour party.
A Morton’s Fork is a logical dilemma where both outcomes are unpalatable. The term, named after John Morton who served as the Archbishop of Canterbury from 1486 to 1500, is the latest term adopted by Sir Martin Sorrell, chief executive of WPP, to describe his outlook for the economy.
Sir Martin noted five “grey swans” that could threaten the health of the global economy but conceded that the sixth - the Scottish referendum - had “flapped away, at least for the moment”. He listed the fragile eurozone economy; the rise of ISIS; the slowdown in the BRICs nations, notably Russia and China and the US budget deficit as long-term issues that could cloud economic progress.
He said that the UK looks set to “slip into the political cycle again” after the election to deal with the budget deficit. “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.
WPP’s UK business grew 15 per cent in the fourth quarter, a slight rise from the previous three month period.
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The company said that profit broke the £1.5 billion mark for the first time in 2014 although it fell short after stripping out exceptional items. Pre-tax profit rose 12 per cent to £1.45 billion while sales grew 4.6 per cent to £11.5 billion with growth subdued by movements in currency.
The results were ahead of expectations and analysts said that WPP “led the pack” last year, a period dominated by the failure of Publicis to merge with Omnicom.
WPP shares dipped 7p to £15.34.