On Saturday afternoon I took one of my children and my oldest granddaughter round Harrods. While we looked for a dress for my granddaughter’s upcoming 10th birthday, my son-in-law was preparing a barbecue and party for friends from the village where his family lives in Oxfordshire, a scene that was being repeated all over the country. My daughter and granddaughter stayed on shopping in London while I rushed home to watch the match (quite possibly a mistake for an England supporter).
On Saturday afternoon I took one of my children and my oldest granddaughter round Harrods. While we looked for a dress for my granddaughter’s upcoming 10th birthday, my son-in-law was preparing a barbecue and party for friends from the village where his family lives in Oxfordshire, a scene that was being repeated all over the country. My daughter and granddaughter stayed on shopping in London while I rushed home to watch the match (quite possibly a mistake for an England supporter).
The point of this story is not everyone or every business in England is impacted by the World Cup. Harrods was busy, but I only saw two World Cup related items (although admittedly I did not visit the whole store). In the toy department there was an invitation to challenge ‘Harrods’ star player’ at table football, but of the star player there was no sign. Elsewhere a replica of the World Cup was accompanied by baseball caps for a number of the teams.
There are some economic activities that could recent a negative hit from the World Cup. Let’s leave them to one side for a later feature and just talk about the upside. Of course, how big that upside is depends on how far England get and they have to recover from a stuttering start. According to the Centre for Retail Research, if England do moderately well and reach the last 16 retail sales will be boosted by £987m. Should they exceed expectations and reach the final the boost would be no less than £2.1bn.
For supermarkets the big boost will come from the ingredients for my son-in-law’s barbecue: alcohol and party food. Sainsbury’s expected yesterday to be its busiest trading day since the run-up to Christmas. They were expecting a 100 per cent increase in beer sales while rivals Asda were anticipating shifting 18,000 pizzas and 22,000 curis every 90 minutes during ‘Super-Footie Saturday’.
Every retailer is trying to get in on the act, some more successfully than others. B & Q is going for garden gnomes dressed in England football kit and wheelbarrows featuring the cross of St.George which to me sounds a bit naff even for the most patriotic gardener.
Bookmakers should also be in the money. They are expecting to turn over a record £1bn during the four weeks of the World Cup. The big change from the last World Cup will be punters’ appetite for fast-growing ‘in running’ internet bets which allow bets to be placed while the match takes place. The UK is anticipated to be the biggest ‘live betting’ market.
Televisions usually sell well before and during a World Cup, although those who bought a HD set will have been disappointed to miss England’s goal after ITV managed to screen an advert and a station identifier when England scored their one goal against Team America. They put it down to a transmission error, but some fans it confirmed their view that the commercial channel don’t know what they’re doing when it comes to live football.
Last week television sales at market leader Currys were up by 140 per cent year-on-year and 80 per cent higher than at the last World Cup. Comet stores have seen an increase in TV sales of 76 per cent in the run up to the World Cup. The Curry’s offer of £10 back for each England goal scored has not proved too expensive so far and in any case they are fully hedged against the cost/
For some sectors of the economy, the outlook is more mixed. Sports retailers may find supermarkets and other outlets taking quite a lot of the market for footballs, England flags, replica shirts and the like. They might expect to add £100m to sales.
Pubs should attract extra trade. Some fans like the shared experience, but they can also find that at their own parties. While 21m extra pints are forecast to be pulled, it won’t solve the fundamental problems being faced by the trade, in particular cheap booze sold in supermarkets. Punch Taverns, which has a tenanted estate of 4,300 pubs, thinks that a sunny summer would give it a bigger boost. Nevertheless, for independents or tenants, a successful England campaign could help them to keep trading.
In looking at the impact of any sector of the economy, one has to bear in mind that many of those in work have been affected by pay freeezes or below inflation increases, while others are worried about losing their job. It could be that most of the extra spending will be money that would otherwise have been spent later in the year, so any consumer recovery stimulated by the World Cup is likely to be fragile.
While the tournament is still on, the UK is going to face a budget that is likely to raise taxes and cut spending. That will have a greater effect on the economy than anything that happens in the World Cup, along with Bank of England interest rate decisions.
But, as Keynes told us, ‘animal spirits’ are important in any economy. A successful World Cup for England could boost morale and confidence (although whether the 1966 win had any lasting effects of that kind is doubtful). An early exit could magnify the effects of what has to be a very tough budget.