Martin Sorrell fears Europe's growth problem will last more than just one year
CEO of WPP predicts there will be slow growth until 2017 or 2018
He remains optimistic for Germany, Poland and Russia, as well as "Next 11" economies
Sorrell says it will be "tough sledding" for France, Italy, Spain and the United Kingdom
The 2013 forecast for European economic growth has turned into a prediction for decay. The European Central Bank on Thursday flipped next year’s gross domestic product forecast from growth of 0.3% to a fall of 0.9% next year.
Martin Sorrell, CEO of WPP, told CNN’s Richard Quest he fears Europe’s growth problem will last more than just one year.
“This is a decade of slow growth. We are halfway through it. Hopefully we are halfway through it,” says Sorrell. “And there’s going to be another three, four, five years of tough stuff until we get out of it around 2017, 2018.”
But Sorrell, head of the world’s largest advertising company, said he sees an easier path for Eastern Europe over Western Europe. He is optimistic for the former, citing energy resources in Germany and Poland, and is even “very bullish” on Russia.
“The axis of those three countries is very popular and is very positive – certainly in the short to medium term and maybe even longer term,” says Sorrell.
But Sorrell says it will be “tough sledding” for France, Italy, Spain and the United Kingdom.
On Thursday, ECB President Mario Draghi outlined Europe’s short-term growth challenges as the eurozone fell back into recession in the third quarter. Poor consumer demand, investor sentiment and “subdued” foreign demand led to the downgrade, Draghi said.
Europe’s chronic debt crisis has also loomed as a cloud over the Continent the past few years.
The U.S. fiscal cliff is yet another concern. If Washington fails to stop a series of automatic tax hikes and spending cuts scheduled to kick in on the first day of 2013, the non-partisan Congressional Budget Office says the world’s largest economy could fall back into recession and potentially take other countries down with it.
WPP’s Sorrell blames the past few years for the problems of the present and the future.
“Given the excesses of the past, given the overexpansion, the overinflation of the money supply, the problems that we had which culminated…in August 2007 in the United States with the subprime crisis – and really were topped out by the Lehman crisis of September 2008 – really it’s going to take a long time for us to get through that.”
Looking forward, Sorrell says his strategy for WPP is “quite clear” and involves expanding further into digital media and into the BRICs – Brazil, Russia, India and China – and nearly a dozen other emerging economies such as Indonesia, Egypt and Mexico known as the Next 11.
“We have to fight our way through this.”