The decrease in research spend was steeper than the overall reduction in COI turnover, which was down 1.5% to £531.5m for the year ending 31 March, but COI chief Mark Lund is forecasting severe reductions across the board in the next financial year.

The Conservative-Liberal Democrat coalition government has set a target to reduce annual government spending by £83bn by 2014-15, some of which will come from cuts in advertising and marketing campaigns.

Following the election in May the government implemented a freeze on ad and marketing spend. Lund said: “Government will continue to commission campaigns this year, but only when there is an essential need to do so.”

He said the COI was already budgeting for a reduction in turnover when the government announced the new restrictions. In light of this, he said the COI’s supervisory board was undertaking a “size and shape review to ensure that our service remains efficient and effective, both during the marketing freeze and beyond”.

Staff reductions are a likely outcome, according to Lund, but a spokesman said it was to soon to put a figure on how deep the cuts will have to go. Further clarity should come with the publication of the government spending review in October.

There’s hope that the COI will be able to maintain a sizeable research team and budget following the review, given government interest in behavioural theory. Writing in the COI’s annual report, research and insight head Fiona Wood (pictured) said: “There’s an improved understanding of what shapes our behaviour or compels us in particular ways. By harnessing this insight and incorporating it into policy objectives and communications planning right at the beginning of the process, government is more likely to realise long-term benefits and return on investment.”