This rate of budget trimming is broadly similar to the previous quarter, when spend was reduced by 5.4 per cent.
The report also says that budgets for 2011 have been set higher than spend in 2010, with 39 per cent of respondents planning to increase spend, compared with 22 per cent foreseeing a decline.
Chris Williamson, chief economist at Markit and author of the Bellwether report, says, ‘Companies remain clearly cautious about committing to non-essential expenditure.’
He adds, ‘Cost-cutting remains high on the agenda as firms seek to protect profit margins in the face of strong upward cost pressures and concerns about deficit-busting Government spending cuts.’
IPA president Nicola Mendelsohn says, ‘We must remind ourselves that this downgrade is still markedly less severe than that seen throughout 2008 and 2009, and that it is encouraging to see that companies are still planning to increase their spend versus 2010 levels.’