Speaking to the BBC’s Newsnight after wrapping up a day that included the WPP Group annual general meeting, the chief executive said that examples of how Western Europe could be more competitive can be found in the Asia Pacific region, Latin America and the burgeoning Africa.
"If you go and talk to every city state, every city, these issues in terms of international competitiveness are absolutely crucial," he said.
"How do you get a more educated, more skilled, more mobile workforce? If you go to the East, or the South in Latin America, or the South East in Africa, because the focus is on Africa because of the World Cup, as there will be growth there.
The sort of things that they are doing, the rebranding exercises and the technology-based expansion they are doing, and manufacturing-based expansion, is the sort of thing we should be doing here."
In reaction to news that unemployment would increase in the UK, due to dramatic cuts that would see a further 600,000 jobs lost in the public sector, Sorrell said the UK would have to face "further unemployment" but added the country is "up for it", if they see the future benefits.
He said: "I think the government’s strategy is quite clear they have a five year term, a fixed term, perhaps, and what they are doing is the unpleasant stuff early on."
Sorrell called for a "coherent strategic plan" that would include "education, training, labour mobility, technology, high added value manufacturing infrastructure or taxation policy."
Likening the current coalition government policies to the harsh measures taken under prime minister Mrs Thatcher, Sorrell said: "All the things that were done by Mrs Thatcher, whether you agreed with her or not [after the Falklands war] got us back to a stable base, and what’s happened since then is we’ve gone down the slippery slope of government spending."
Meanwhile, speaking at Intel’s ‘Shaping the Future of TV’ event yesterday, Sorrell predicted there will be an increasing battle between device manufacturers, platforms and content providers to control the future of the UK TV business.
He believes pay TV’s share of the UK marketing will increase from around 40% to as much as 60% in the next 10 years.
Drawing on Rupert Murdoch's News Corporation's recent attempt to takeover BSkyB, he said: "Rupert [Murdoch] is always on the forefront of trends…he and James [Murdoch] display an immense understanding of pay TV… we think the News Corp and Sky deal will happen, and get past the regulators… It will be a very shrewd move."
On Monday, the Chancellor, George Osborn made a personal plea to Sir Martin Sorrell to return the business interests of WPP Group from its current base in Ireland to the UK.
Singling out the WPP Group, Osborn said: "I want to reform the corporate tax system so that international companies locate in Britain rather than leave Britain."
Sorrell's WPP Group, which owns global creative agencies JWT and Oglivy & Mather and media shops MediaCom and Mindshare, has recorded a revenue rise of 1.8% in the first five months of the year, according to a trading update at the advertising network's annual general meeting held in Dublin yesterday.