Tax rises are inevitable in order to tackle spiralling pandemic-driven public debt across the world, Sir Martin Sorrell has warned.
The S4 Capital advertising mogul told City A.M. that while he expected strong economic growth this year and in 2022, “at some point the chickens do have to come home to roost”.
Sorrell said he expected “some sort of correction” in 2023 or soon after.
“If it’s true that we’ve had this heavy fiscal stimulus and if that has to be balanced by increased taxes, what more would you expect?” he said.
“It’s got to happen, this has to be paid for at some point in time.”
The UK’s budget watchdog has forecast government spending to hit £355bn during the pandemic year — the highest level ever recorded in peacetime.
In the Budget earlier this year chancellor Rishi Sunak announced an increase to corporation tax to help tackle the mounting debt pile, though this will not come into force until 2023.
Meanwhile the US has pumped vast sums of money into the economy through three coronavirus relief bills, including a $1.9 trillion rescue package unveiled by President Joe Biden in March.
Sorrell acknowledged comments made by JP Morgan chief executive Jamie Dimon, who last month predicted that continued stimulus measures could drive an economic boom until 2023, with a slowdown not kicking in until after that date.
Sorrell said Dimon was “cleverer than me so maybe he’s right”, but added: “Many people are worried about inflation but I just think overheating with this sort of infusion is probable in 2023.”
The comments came after Sorrell’s S4 Capital posted strong revenue and profit growth in the first quarter and hiked its targets for the full year.
The digital advertising firm has proved resilient during the pandemic, cashing in on growing demand for its services from major tech clients including Facebook and Google.
While any tax hikes could have a knock-on effect on consumer spending, the ad chief said he was confident S4 would continue to grow in 2023 and meet its target of doubling in size.