Aegis, Europe's largest media buying group, today predicted worldwide advertising growth over the next two years as it recorded a rise in profits for 2003.

This year's growth will be fuelled by the Olympics, the European football championships and the US presidential election, which will account for 0.9% of the rise, according to the company, which also owns Europe's largest advertising buying and planning agency, Carat.

The Aegis chief executive, Doug Flynn, predicted spending would slow because of changes in fiscal policy in the US following November's election, with interest rates tipped to rise by the end of the year.

"Spending would then be slower, but it's not going to fall off a cliff," Mr Flynn said. "The key is corporates are reinvesting in their brand equity, and they're not going to turn the tap off in 2005."

Global advertising spend will rise by 5.3% in 2004, Aegis said, followed by a 4.4% rise in 2005.

Mr Flynn said he was not as "pessimistic" as WPP's Sir Martin Sorrell, who recently warned the advertising industry it could "take a shower" in 2005.

The Aegis boss said Europe was now following the US and Asia Pacific region in recovering from the advertising recession, but at different rates.

Spain, Italy and the UK were already improving, he said, with France and Germany lagging behind because of their "stultifying environment" for business.