• by Sean Hargrave , Staff Writer, January 14, 2016

At some point Western economies will have to function normally, and the prospect of that day of reckoning looming large appears to be approaching this year. Years of quantitative easing, or printing money, combined with interest rates close to zero have meant that the world has been awash with largely unearned money, and governments and observers have run the risk of thinking that we are in a better place than we actually are. That's the consensus that most economists appear to be sharing as we enter 2016 -- and it could mean bad news for adland.

Already there are some warning signs. The IPA Bellwether figures show that although UK marketers increased budgets in the last quarter, they did so by the tiniest of margins and by the lowest proportion seen in three years. It must be remembered that this is despite UK marketers having the double whammy of an Olympics and soccer's Euro 2016 tournament to boost the mood going forward. Mind you, these summer tournaments would not have had an impact on what marketers decided to do in the last quarter of 2015, so who knows -- maybe the downbeat forecast from the IPA is the equivalent of a "dry" January as confidence from last year is detoxed away with grim concerns. And let's not make light of this -- there are some truly grim concerns out there.

With a rise in interest rates plausible in the UK, following the Fed's decision last year, the record household consumer debt -- which has been mounting in an era of cheap credit -- will suddenly look a lot worse. Even more worrisome are those commentators pointing out that assets bought with free or cheap money over the past handful of years are now proving less valuable, hence a downward pressure on markets and stock exchanges across the world. Talking of which, China is looking distinctively wobbly adding to the global "head winds" which the Chancellor warned off as we entered 2016.

Take note, there is all this to be concerned about and we haven't even started yet on the Euro bailouts which will likely see either Greece or another Southern EU country seeking better terms on a previous loan to bail them out for the next payment. We also haven't even touched upon the looming UK vote on whether it remains within the EU. 

So, as far as adland is concerned, there are some warnings of icebergs in the ocean that will need to be navigated around. The big question is whether the optimism of 2015 will carry us through the next year if we go back to being more of a normal economy where interest rates aren't set at near zero. This has meant that people consume more because loans are so cheap, and for those with money, it's pointless having it in the bank.

The other big question for adland is whether the bonanza of the Olympics and Euro 2016 will keep the industry afloat as brands reach out to highly engaged audiences through events that will span a couple of months between them. Let's not forget that three of the four home nations are through to Euro 2016 in France this June, so a lot of alcohol, travel and entertainment will be in order with, one can imagine, a heavy push on the latest 4K televisions. Even though the Olympics are on the BBC, there will be brand associations with the team and athletes that multiple brands will be out there communicating.

So if you ask me, the latest bellwether is, as a bellwether should be, a warning. The country will still be employing a record number of people, interest rate increases will be gradual and energy prices should remain low. Sure, there are major issues ahead, but these have also been looming throughout the last year. As long as interest rate rises are modest and don't send people in to negative equity and employment remains at a record high, I suspect it will be more of a steady as she goes, rather than an abandon ship scenario.