WPP to move back to the UK

Sir Martin Sorrell told BBC Radio 4’s Today programme that he will recommend moving WPP’s HQ back to the UK.

WPP moved its parent company from the UK to the Irish Republic in 2008 due to the UK taxation on profits earned outside the UK.

However, the advertising company may move back following chancellor George Osborne’s budget announcement yesterday, which will see cuts in corporation tax. Osborne said he will alter the taxation regime on profits earned overseas by UK firms.

WPP, which is the second biggest advertising company in the world, makes 90% of its profits overseas.

Sorrell said the changes will mean that he, as well as WPP’s chief finance officer and tax officer, will be putting a proposal to the company’s board to return the parent company to the UK.

According to BofAML, WPP’s current ad data remains buoyant, with organic growth up 7.3% in January and February. WPP expects further recovery in ad spend this year from its 2009 cyclical low point, while factors such as the Olympics, US elections and Euro 2012 are likely to add 1-2% to global ad spend in 2012.

Nearly half of WPP’s organic growth assumption of +5.4% is coming from emerging market regions. BofAML says there are secular growth drivers alongside GDP expansion, with advertising coming of age as consumerism takes hold. Similarly, quality digital expertise remains scarce and highly valued by businesses, and WPP is the biggest player in the game, at c$4.2 billion of revenue (c29% of group).