I hope you all had an excellent time this summer watching the Euros! Sadly, it didn’t come home… However, the Euros stimulated immense economic growth, impacting millions of viewers and fans worldwide. This is increasingly important for businesses worldwide that are still struggling post the pandemic. While the most tangible evidence of this economic growth is seen in the host country—Germany, in this case—its effects are felt globally.
One of the most significant economic impacts of hosting the Euros is the substantial investment in infrastructure. Although the exact figures for Germany have not yet been published, past tournaments suggest investments amounting to billions of dollars. This funding is directed toward building stadiums, improving public transportation, constructing new airports, and more. These projects create numerous employment opportunities, providing a much-needed economic boost. With increased employment, people have more disposable income, raising aggregate demand and stimulating further growth.
Moreover, the skills workers acquire during these projects are highly transferable, enhancing the workforce's mobility and productivity. This shift can push the production possibility frontier (PPF) outward, leading to higher long-term output. Additionally, the government benefits from increased tax revenues due to higher incomes. The improved infrastructure also enhances future tourism prospects and improves residents' quality of life.
Secondly, there is an immense influx of tourism into the country, significantly boosting the local economy. Fans travel from all corners of the globe to witness what they believe would be a once-in-a-lifetime opportunity if their country of choice wins. These fans splurge not only on their tickets but also on hotels, travel, food, and drinks. This leads to higher revenue for local businesses, hotels, restaurants, bars and more. This summer, the estimated amount brought in by tourists is just over 1 billion dollars. The exact stat will be published at a later date, however, as an example, when France hosted in 2016, the tournament attracted around 2.5 million tourists and generated an estimated 1.2 billion dollars for the local economy and SMEs.
The Euros also foster numerous social and cultural benefits. The tournament brings entire countries together, which is increasingly important in times of political polarisation. This sense of unity positively impacts social cohesion and community spirit. Additionally, the spotlight on sports can encourage greater participation in physical activities, improving national health. The players themselves can serve as beacons of hope, inspiring those struggling during challenging times.
Now, onto the global benefits. This economic influx not only benefits the host nation but also stimulates economic activity in the travel, hospitality, and service industries globally. Airlines, travel agencies, and international hotel chains see increased bookings, contributing to increased global economic activity. Secondly, the Euros provide a platform for cultural exchange and international connection. Fans from all backgrounds come together in a show of global unity. Moreover, the widespread media coverage of the event promotes European culture worldwide, enhancing its global image and potentially boosting future tourism and business opportunities. Additionally, the global broadcasting of matches engages audiences across continents, driving advertising revenue and increasing the global reach of brands and sponsors associated with the tournament. Moreover, more traffic is driven to pubs and bars during this extended period. This is increasingly important during the economic slowdown, as these businesses are still struggling in the aftermath of COVID-19. Finally, the Euros inspire and promote football development worldwide, encouraging investment in sports infrastructure and youth programs in various countries, nurturing the next generation of talent and fostering a healthier, more active global population.
While the majority of this article has focused on the positives, it is important to note some of the negative effects that occur. Firstly, the host country will face a substantial financial burden when preparing for this injection of investment. During this incredibly volatile and stale economic period with high interest rates, Germany probably had a significant discussion about it. These expenditures can strain public finances, especially if the expected economic returns do not materialize. Additionally, the influx of tourists can lead to short-term demand-pull inflation, driving up prices for accommodation, food, and services, which can negatively affect local residents. In the worst cases, it causes a cost-of-living crisis. Small businesses may also struggle to compete with larger companies that dominate the market during the event. Moreover, there is a risk that the newly built infrastructure may become underutilized post-tournament, leading to maintenance costs without corresponding revenue. The disruption caused by the tournament, such as increased traffic and security measures, can also negatively impact local businesses and residents' daily lives. The pushback of residents can disrupt the entire economy, as seen in Frances's response to the Olympics being held in Paris. Furthermore, the intense focus on the tournament can divert public funds and attention from other critical areas such as education, healthcare, and social services, potentially leading to longer-term socio-economic imbalances. Finally, a negative effect on the entire globe is the environmental impact caused by increased waste during this period, which would negatively impact the climate crisis.
In conclusion, the UEFA European Championship is more than just a football tournament; it catalyses economic growth and development. Through infrastructure investment, tourism boosts, job creation, and long-term financial benefits, the Euros have a lasting positive impact on host countries and the globe. While the tournament lasts only a few weeks, its economic, social, and cultural effects resonate for years, demonstrating the power of sports on our entire society! However, there are some negatives to this growth that have to be dealt with and addressed when planning this major event.
Let's hope it will come home next time!
By Annika Bjerregaard
https://www.insidermedia.com/news/national/euro-2024-what-englands-semi-final-means-for-the-economy#:~:text=UEFA%20Euro%20is%20coming%20to,%C2%A32.6bn%20for%20nations.
Very interesting
Great article Annika!