Twenty-two per cent of the 300 companies surveyed said budgets had been cut in the final three months of the year against 17% reporting an increase, giving a net balance of -5.4%, said economist Chris Williamson, who prepares the report on behalf of the Institute of Practitioners in Advertising (IPA) and accountancy firm BDO.

Williamson said the figure, despite being a one-year low, remained higher than throughout 2009 and much of 2008, when the financial crisis was at its worst.

Internet, search and direct marketing budgets were up in Q4, but at a slower rate than previous quarters, while media sales promotion and ‘all other’ spend – covering research, PR, events and more – was down (see chart).

“The Bellwether highlights the bumpy road of recovery that the UK economy is travelling along, and sets the scene for a difficult year ahead,” said Williamson. “However, it is reassuring to see that marketing budgets have been set higher for 2011 compared to 2010, led by main media advertising. This bullish message should not be overlooked.”