The World: Chicago - General Motors set to slash agency spending

General Motors, the fourth-largest advertiser in the US, plans to cut its agency fees by up to 20 per cent, sparking fears among agencies that other clients could follow suit.

The move by GM, which spent $3 billion on advertising in the US last year, follows adspend cuts by Procter & Gamble and Unilever.

Agencies believe this signals that the recession will be tougher than expected.

Agency executives say GM had alerted its roster shops some time ago, allowing them to take measures such as cutting back on new hirings.