Would winning the Euros boost the UK economy?
If England win the UEFA European Football Championship European Championships on Sunday will this be good news for the economy? That is a question I have been asked today, in the wake of comments by Chancellor Rishi Sunak. What is the answer?
Interestingly, most of the analysis on the economic benefits of hosting a major sporting event (like the Euros) focus on the boost from building new stadia, improving infrastructure or attracting tourists (say, with Qatar next year), but these are not relevant for England and the UK now, as the stadia were already in place and because of the pandemic, cross-border tourist flows are not happening.
But is there any evidence about winning having an economic impact? A World Cup report by Goldman Sachs showed there was a temporary short-term equity boost for the winners: 3.5% in the first month, before fading rather quickly after that. Realistically, though, one cannot quantify the economic benefit of being victors. But if England were to win the Euros we might be able to say there will be an indirect positive benefit. Or to put it another way, we may not be able to quantify the benefits of winning but we can say in qualitative terms that it will be positive. The outlook for any economy, including ours, is driven by a combination of the economic fundamentals, policy and confidence. Of these, confidence is the hardest to predict. Last year, the economy suffered as it was locked down and as confidence collapsed. Confidence was seen to have benefited in the 1996 Euros and 2012 Olympics where England and then the U.K. performed well. On this occasion, post Brexit and post the pandemic, an England victory may help in two ways: One, it may help the image of England (and the U.K.) globally by portraying a positive message; Two, post pandemic the picture of the economy is mixed so this could provide a boost.
While England winning the tournament may not help you if you have lost your job or are nursing increased debts, it may indirectly help to feed a feelgood factor and thus boost confidence. Given that the data shows overall savings are much higher post pandemic, it may tempt some people to spend more.
Of course, there will be higher spending because of opening up and also because of increased spending in bars and on hospitality as people may go out to watch the final. The economy seemed to pause last month as uncertainty about health issues delayed unlocking then. Thus, the takeaway is: the economic impact if England were to win the Euros should not be overstated but it should also not be ignored. It may indirectly boost confidence and trigger higher spending. And finally, another longer-term positive – often cited – from hosting sporting events and from sporting success, is that it may create role models and encourage more people to keep fit and take up sport. Perhaps with an infrastructure boom imminent it may presage increased spending on sporting facilities.