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Politics and events are key

We were spoiled in the 1990s. All you had to do was go into the office. With a tightly-controlled Rubin/Greenspan US economy dominating the world and Friedmanite economics driving the global economy, life was relatively easy – despite the world's second-largest economic engine, Japan, being out of order for 12 years or so. Strong growth, low inflation and high, but not full levels of employment, drove a 10-year bull market, such as we have not seen since the 1920s.

The speculative blowouts around the internet and sub-prime were perhaps inevitable and, given their size, lengthy corrections were and may be necessary. Overall, the past seven or so years have had their share of pain. After growing consistently through the 1990s, culminating in organic growth of 15% in 2000 (20% using the yardstick of our competitors), WPP shrank or flattened, on a like-for-like basis, in 2001 and 2002. It resumed modest growth in 2003 and 2004 and demonstrated stronger, more broad-based growth between 2005 and 2007.

Ten fat years, three lean ones and a return to the same modest nominal growth in (until very recently) a lower inflationary environment in the past five years – mostly due to quadrennial events in three of the last five years and perhaps a growing acknowledgement of the importance of innovation and branding particularly in the last three.

It seems our business is becoming increasingly event-driven, particularly by the political cycle. President Bush wanted a strong economic background to his re-election in 2004, as did Prime Minister Blair in 2005. President Bush will seek the same for his 2008 Republican nominee, John McCain, and he continues to spend heavily, with the government being the only big employer continuing to hire significantly in the US in the current troubles. And Prime Minister Brown will want the same for his first electoral campaign as Prime Minister in, say, one or two years. His last three budgets were models of early-term caution. When was the last time we experienced a recession in an election year?