Both main parties could be bad for business, claims WPP chief executive Sir Martin Sorrell

Chief executive of the advertising giant WPP said both Labour policy and Conservative EU referendum would cause jitters

Sir Martin Sorrell (David Sandison)

A coalition led by either Labour or the Conservatives after the election is likely to be bad for business, Sir Martin Sorrell, chief executive of the advertising giant WPP, has warned.

Sir Martin, who was paid £36m last year but recently donated £21m of WPP shares to his own charity foundation, said: “Last time around we said that a coalition couldn’t work and wouldn’t last the full five years. So we have to wait and see what happens this time.

“The Conservatives would be better for business but you have the prospect of a referendum over Europe. With Labour you have a party which does not favour business and will probably cause jitters over sterling.”

The first quarter saw WPP’s revenues rise by 8.3 per cent in sterling terms to £2.8bn. Like-for-like revenues rose by 5.2 per cent. The strength of the dollar and the weakness of the euro almost cancelled each other out.

Profits and profit margins were well above target. The US and UK showed good growth, Asia was strong and Latin America slightly weaker.

The group is sticking with its forecast of 3 per cent organic growth for the full year, which will not enjoy the quadrennial events such as the Fifa World Cup, Olympics or the US presidential election, which is in 2016.

Sir Martin is in no doubt that both holding an EU referendum and a result which signals a pullout would be bad. He said: “The referendum itself, which Cameron has at least said will be in 2016 rather than 2017, will cause great uncertainty.

“If it goes against, it means there could be little England (and possibly just England) on the edge of Europe. That matters to WPP because, for good or evil, our trading partners are rooted in continental Europe.”

Recent poll results from WPP’s own TNS have shown a slight move in favour of staying within Europe, although Sir Martin said the split is still very much one third for, one third against, and one third undecided.

Sir Martin also warned of the growing threat of activist investors to business and cited the merger of Heinz and Kraft, which is “not about growing the business through new products and brands but about cutting $1.5bn of costs.”

He welcomed the fact that some long-term institutional investors are “tiring with some companies’ total focus on short-term cost-cutting and would favour strategies based more on long-term and top-line growth”.

WPP shares fell 24p to 1,572p.