We love to hate it but advertising shows we could outstrip Germany

My Week

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The Independent Online

The Queen’s state visit to Germany put historic relations in focus this week. As the monarch stood and squinted at a portrait of a royal-blue horse and a figure that was meant to be her father, a small but significant statistic passed most people by.

Around 900 miles from Berlin, in Cannes, the cream of the advertising industry were partying hard at their annual shindig. Between cocktails, new research from the media firm ZenithOptimedia revealed that the UK is on course to eclipse Germany as the world’s fourth-largest advertising market – after the US, China and Japan - this year.

So what? You might think. Consumers whose letterboxes are already stuffed with junk mail may regard this as a terrible development. Yet advertising is a leading indicator. At the first sign of tougher economic times, companies trim their marketing budgets. When the economy revives, spending quickly bounces back. Advertising becomes a proxy for prosperity.

On the current trajectory, the UK economy as a whole might be larger than Germany’s by 2030. This is something not seen since 1954. Germany, the manufacturing powerhouse of Europe, is being held back by euro weakness and a declining population.

That advertising will get there first is a reminder of the UK’s digital prowess. Much of the growth – British ad spend went up 7.8 per cent in 2014 and will average 6.5 per cent yearly growth to 2017 – can be attributed to the rapid adoption of internet advertising. Increasingly, messages delivered to smartphones are the greatest driver.

It isn’t all plain sailing, though. Recently I met Andy Duncan, who as well as being chief executive of the lottery operator Camelot is the current president of the Advertising Association.

His concern is that trust in advertising among consumers is bumping along the bottom, due to aggressive tactics and some unfortunate campaigns like Wonga’s cuddly puppets selling loans with sky-high rates attached. Advertising was one of the industries to pioneer self-regulation and must work just as hard as newspapers to prove it is the right way forward – however good the numbers look.

Wise owl mingles with the Bank’s hawks and doves

Over tea at the Bank of England with Dame Nemat “Minouche” Shafik, it was clear that the Deputy Governor was not going to give clues about the timing of a rate rise. She played it safe, saying that recent wage growth figures were encouraging, that the impact of falling energy and food prices was working its way through the system – and that a strong rebound in productivity was still absent.

Her Monetary Policy Committee colleagues Martin Weale and Kristin Forbes have had much more to say on the subject, with Mr Weale hinting that he may start to vote for higher rates this summer as the economy gets on a firmer footing. Ms Forbes, a US economist, appears similarly hawkish.

We know much about Dame Nemat, who was the World Bank’s youngest-ever vice president at the age of 35 and who managed some of the most troubled countries – Greece, Portugal, Spain and Cyprus – through the eurozone bailout while at the International Monetary Fund. What we don’t know are her voting intentions, after she described herself not as a hawk or a dove, but an owl, with the attendant wisdom. She has a pair of owls carved into the ornate fireplace in her Threadneedle Street office.

ITV’s chief is better with programmes than names

There was a garden full of politicians milling with the cast of Emmerdale at ITV’s summer drinks party in Westminster on Wednesday night. John Redwood was there, musing about the UK’s future in Europe. So too was Iain Wright, a former apprenticeships minister under Gordon Brown, who has just wrestled the chairmanship of the Business, Innovation and Skills committee away from Adrian Bailey. Hopefully he can make its output matter more, given the committee trailed behind the Treasury and Public Accounts committees in the last government.

The ITV chief executive Adam Crozier obviously had politics on his mind too, boasting in a speech of how many politicians had come to the broadcaster’s “Miliband studios” to be interviewed, when he meant to refer to its riverside studios at Millbank.

ITV is flying high. Numis analyst Paul Richards, clutching four glasses of wine, recalled turning bullish on the stock in 2009 soon after its shares rebounded back above 20p. Now they are trading at more than 10 times that. Most of that revival has come because ITV has put commercial performance ahead of pleading for regulatory relief – a favourite trick of former management teams.

Harness disability and the global economy will benefit

I chaired a panel at the House of Lords on Monday to mark the launch of Business Disability International (BDI). The organisation is there to prove there are performance benefits for any company that treats disabled people properly. Specifically, it will help global companies introduce best practice in countries where regulation and culture differ wildly. One statistic stood out: if disabled people were to contribute fully as employees and customers, it would equate to a $3.5trn uplift to the global economy.

BDI’s founder members are GlaxoSmithKline, Barclays and Infosys. Their message was: we might be first, but we still have lots to learn.