A few quick thoughts on the economics of the Euro 2020 football tournament and calls for a snap Bank Holiday if England beat Italy in the final.
England’s sterling performances during the tournament have been great for the nation’s mood. It has been fantastic to see the country come together and have so much to cheer after such a difficult time. This has social benefits far beyond any measurable impact on GDP, and hopefully these benefits have been banked whatever happens in the final itself.
Nonetheless, even winning the Euros is unlikely to be a game-changer for the UK economy.
Some argue that an England victory would encourage people to spend more of their pandemic savings. But consumer spending is not really being held back by a lack of confidence, which has already recovered this year (thanks mainly to the successful rollout of the vaccines).
Instead, people are either unable to spend as much as they would like because of the remaining coronavirus restrictions, or are reluctant to run down their pandemic savings because of lingering fears about health or jobs (an increase in ‘precautionary’ saving).
An England win wouldn’t change any of these key factors. Indeed, a resurgence of Covid worries could easily trump a short-lived boost to confidence from football success.
The pandemic savings have also been unevenly distributed. Many millions on lower incomes – perhaps including some of the most avid football fans – have actually gone further into debt. They might be happier if (sorry, ‘when’) England win, but they won’t have any more money to spend.
Past sporting successes – such as the 2012 Olympics – have boosted GDP. But this boost has mainly come from hosting international events (additional infrastructure spending and an influx of foreign visitors, neither of which apply to the Euros), rather than from winning them. The extra money spent by England fans in pubs, or on merchandise, may also just be diverted from spending elsewhere in the economy.
A snap Bank Holiday would be disruptive and actually negative for GDP. Not many businesses can easily shut at short notice, or afford to do so. Many workers (think of the NHS, or essential retail) won’t be able to have a day off, which would be unfair. Think too of the impacts on customers and service users.
Of course, there may not be much work done on Monday anyway, but that can and should be left to individual firms to manage and staff to agree with their employers.
In short, there are many reasons to cheer on the English team (unless perhaps you’re Scottish). The fact that there may not be much of a boost to GDP may simply reflect the weakness of GDP as a measure of wellbeing. But while I’d love to say that the economy will get a major lift, it probably won’t.
Ps. there’s some evidence that success in football tournaments is bad for the birth rate! Not sure what to make of this, but here it is.