WPPchief's warning as growth hits 3-year low

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Britain's economy grew at a snail's pace of just 0.4% in January, February and March - its slowest rate since early 2005. Growth was only held up by service sector companies like WPP, but even there, output growth was slowing.

Sorrell, seen as a sage of the global economy because of the vast reach of his businesses like JWalter Thompson and Young & Rubicam, said there would be a marked slowdown in growth next year.

He predicted a timelag between the events in the US subprime market and an impact on the real state of the world economy.

"The truth of the matter is that we are currently in a very varied climate, a very patchy environment but one that is currently being helped by the big quadrennial events of the Olympic Games, the US Presidential elections and the European football championships.

"The question is: when will the real world start feeling the effect? My feeling is that it is 2009 when the rubber really hits the road," he said.

His view was shared by analysts at the Capital Economics consultancy, which today cut its economic forecasts to 1.7% this year and just 1% in 2009.

WPP shares tumbled more than 7% this afternoon as investors responded to Sorrell's gloomy predictions.

Like-for-like sales growth of 5% in the first quarter of the year fell short of City expectations and there were particular worries about trading in western Europe last month.

Sorrell admitted that the regional breakdown of WPP's figures for the first quarter, which showed a strong January and February but a weakening March, had surprised him.

"We have seen a stronger-than-expected performance in the US, up over 5%, stronger than commentators might think, but an unexpectedly slower western Europe where Germany, France and Spain grew by only 3%," he said.

"The UK market, which has not been good for a number of years, remains the toughest of the lot."