World cup fever heats up economy

By Andrew Smith, Chief Economist at KPMG UK

Having scored five straight quarters of positive growth since the recovery began in early 2013, and with real wages starting to pick up the economy can look forward to a further boost from the World Cup this summer.

Regardless of how far England progresses, retailers, pubs and betting companies can look forward to bumper sales, but an extended England run in the tournament would boost their fortunes even more dramatically according to the Centre for Retail Research. According to their analysis, exiting at the group stage would increase retail and entertainment spend by around 1.3bn pounds Sterling, but should the team avoid the Hart-break of losing in a penalty shoot out and progress to the final the bonus to the economy could be nearer £2.6bn.

Undoubtedly some of this spend, such as TV purchases, is displacement spend – i.e buying now rather than later– but much of it is a genuine one off boost that will be welcomed by retailers, pub chains and pizza delivery men struggling to attract customers in the wake of the recession.

But there are less tangible effects on the economy that are harder to quantify. For starters, a successful tournament for the home nation should provide a general feel good factor, which may well benefit firms other than just the traditional retailers. And some research suggests that sporting success can lead to increased employee motivation, effort and productivity. That said, claims about improved productivity are likely to be disputed by many bosses as colleagues spend the late afternoons glued to TV screens or come in bleary eyed after one of the many late games.

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