Media contributions
1Media contributions
Title "Putting impact of the Euros under the microscope" Degree of recognition Regional Media name/outlet News Letter Media type Web Country/Territory United Kingdom Date 17/07/24 Description The result of Wednesday night’s football match will either make much of the population of England very happy or very sad. Could the Euros have any sort of impact on business and the economy? Especially given that England generates about 87% of overall UK GDP, this is an interesting question for all of us.
There is quite a history of speculation about the effect of football on the economy. In the summer of 2018 Bank of England Governor Mark Carney pronounced that England’s progress in the World Cup was an “unadulterated absolute good” for the economy. Also in 2018, the Bank of England’s Deputy Governor Andy Haldane gave two reasons why he thought the economy might be doing better than expected: summer sunshine plus England’s World Cup achievements.
At the previous Euros in July 2021 the situation was complicated because some lockdown restrictions remained. Some retail activity and consumption may have been lost (more likely postponed) as a result of people spectating rather than shopping. However, consumption of other items probably did rise. Notably, food and drink. In 2024 polling has suggested 13% of UK consumers intend to spend more during the Euros and that retail spending could increase by £2.1bn and hospitality spending by £600m.
That said, forecasting the likely GDP effect in 2024 is difficult. The summer weather has been wet. If fans stay at home to watch on TV rather than go out that could reduce spending (and hence GDP growth).
In 2021 the games were held in London so a direct impact on the British economy was quite likely. This time round many English fans (and for a while Scottish ones too) travelled to Germany. In terms of the national income statistics that travel spending actually counts as an import into the UK economy reducing measured UK GDP. (Incidentally, estimates of the fan based spend are one of the main economic arguments which have been used to justify a hefty public subsidy to build Casement Park in time to host the next Euros in 2028 but it is important not to exaggerate how much spending would actually be generated in the Northern Ireland case.)
The 2021 Euros almost certainly led to a large increase in spending on betting. Comparing the 2014 and 2018 World Cups it is estimated that online betting in the UK increased from £1bn in 2014 to £2.5bn (at the worldwide level betting may have increased by 13% comparing the 2018 and 2022 World Cups). Upsurges in gambling, whether online or otherwise, will “count” to GDP but tend, invariably, to represent gains to the bookies’ profits much more than wins back to punters.
Problem or addictive gambling remains a big challenge for UK public policy including Northern Ireland. (Incidentally, whereas it is often claimed that an operational Stormont is helpful to Northern Ireland, regulation of gambling lags the rest of the UK- the remit of the Gambling Commission, for example, applies only to GB- and the Communities’ Minister has just announced he will not legislate in this area.). Some of the football “gains” to measured GDP could represent impacts on people’s welfare and quality of life which are far from positive, they may even be very negative.
One interesting application of economic theory is about how English progress in the Euros may have lead to higher investment and hence drive future growth. The 1930s economist John Maynard Keynes argued a lot of investment was determined by emotions and gut instincts- confidence about the future. The optimistic view would be that footballing victories could fuel “animal spirits” in England and increase a hitherto very low UK investment rate. Perhaps, to a small extent, but UK industrial investment has been relatively low for a very long time now and there must be a range of factors which explain this.
How might the performance of the national team impact on productivity? In the short run the effect might even be negative- too much distraction from work. However, there is also the longer term possibility that in the warm glow of any further Euros wins work effort and productivity rise.
History suggests we should be more cautious. England reached the Semi-Finals of the World Cup in 1990 and in that year the economy grew by only 0.6%. England famously beat Germany in 1966 but that did not stop German economic productivity surpassing UK levels during the mid 1960s [Note 1]. Consideration of the GDP growth figures for the UK in 1960s provides little evidence of a post World Cup growth surge. In fact, 1966 was one of the slowest growing years of that decade (see Table 1):
Table 1: UK annual economic growth (GDP, %) in the 1960s
% annual GDP growth
1960 6.3
1961 2.7
1962 1.1
1963 4.8
1964 5.7
1965 2.1
1966 1.6
1967 2.8
1968 5.5
1969 1.9
1970 2.7
Souce: ONS 10 May 2024, “GDP Year on Year Growth”, Office for National Statistics.
A year after the 1966 World Cup victory one of the major economic reversals of the post-Second World War period happened: Sterling underwent a major devaluation. The Arsenal supporting PM will be hoping no such economic reversal is on the cardsProducer/Author Esmond Birnie URL https://www.newsletter.co.uk/news/opinion/columnists/esmond-birnie-esmond-birnie-putting-impact-of-the-euros-on-uk-economy-under-the-microscope-4705010 Persons Esmond Birnie
Keywords
- Football
- soccer
- Sport
- Economic impact of sport
- Economic impact of football
- Euros and the economy
- UK economic growth
- northern Ireland
- Northern Ireland economic growth