WPP's Sir Martin Sorrell pinpoints Russian crisis as top global threat

The Ukraine crisis and the impact of sanctions on a newly belligerent Russia is now the biggest risk to global stability, the head of advertising and media giant WPP Sir Martin Sorrell warned today.

Sorrell, in Geneva last week with fellow business leaders for a meeting of the World Economic Forum’s international business council, said the Russian situation was the “one that worries people” most.

Western nations have targeted Russian business leaders with sanctions since its annexation of the Crimea in March, recently expanding them to cover energy, banking and defence sectors.

Russia has responded with tit-for-tat restrictions on imports and an official crackdown, which has seen giants like McDonald’s forced to close some branches.

Sorrell — founder of a £10 billion global empire encompassing agencies Ogilvy & Mather and J Walter Thompson, media buyers GroupM as well as research arm TNS — is wary of several “grey swans” such as the devolution debate and a potential “in-out” EU vote after the next election.

But the Russian crisis is the most threatening of the “unknown unknowns” — his so-called “black swans” — on the radar, supplanting the eurozone debt crisis.

“It’s quite clear that the eurozone has been replaced by geopolitical issues as the most significant issue causing uncertainty, and I think of those Russia and the Ukraine and the impact of the sanctions on Russia is the one that worries people most.

“The geopolitical pattern has got worse in the last few months but it is still too early to judge what the impact will be. You’ve seen a number of chief executives call for negotiations — Paul Polman at Unilever, Sir Richard Branson and others — so it is obviously causing a degree of anxiety.”

WPP expects 2014 to be a “demanding year” and its global reach combined with sterling’s strength meant first half-profits were up just 2% to £532 million although almost 16% higher when adjusted for currency effects. Revenues rose 3% to £5.47 billion.

Despite signs of a slowdown last month — “infinitesimal” according to Sorrell — the firm underlined its sales and margin guidance for the full year and continues to win work from major rivals Omnicom and Publicis following their failed merger last year.

The UK was the group’s strongest performer with comparative revenues growing more than 15%, nearly twice as fast as the rest of the group.