Economic experts expect little stimulus from the European Football Championship

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National coach Nagelsmann with a new jersey: consumer spending is shifting

Photo: Boris Roessler / dpa

Many people still have fond memories of the atmosphere in Germany during the 2006 World Cup. There is therefore great hope that the European Championships in just under three months could also help Germans look to the future a little more happily and confidently. The economic head of the Institute of German Economics in Cologne, Michael Grömling, also expects a psychological effect if national coach Julian Nagelsmann and his team around captain Ilkay Gündogan do well and inspire the fans. “A major sporting event can brighten the mood and improve the image of the host country,” said the expert.

A successful European Championship from a sporting and organizational perspective would make the location more attractive. “Image cultivation is an enormous benefit, especially against the background of weak direct investments,” said IW economics manager Grömling. "At the same time, the economy is shaped by expectations and moods - the emotional return from EM should not be underestimated."

It would be good, because Europe's largest economy is currently stuck in a recession. The IW assumes that gross domestic product will shrink by around 0.5 percent this year. It has already fallen by 0.3 percent in 2023.

A bed can only be allocated once

However, Grömling also warns against expectations that are too high. Directly measurable stimulus for the economy cannot be expected from the EM. “The experience of the Football World Cup in 2006 shows that major sporting events are not economic fireworks,” said the economic expert. Many consumers are likely to use the European Championships as an opportunity to buy a new television, invite them to a public viewing or drink an extra beer while they cheer. “But they save money elsewhere: bratwurst instead of a restaurant, a TV evening instead of a trip to the cinema,” said Grömling. “As a result, consumer spending does not necessarily increase, but rather shifts.”

Even the European guests - hundreds of thousands of fans from the other 23 participating European countries are expected during the tournament from June 14th to July 14th - would not free Germany from the recession. “When in doubt, they push out the other tourists,” said Grömling. “A hotel room can only be given away once.” The event could provide a small economic stimulus for the ten cities in which the games are taking place. But because of this, the gross domestic product will not be higher at the end of the year.

There is still some money flowing in some stadiums in the form of modernization work. "However, no new roads or other infrastructure will be created, as was the case at the World Cup in South Africa," said the economic expert. Income from the sale of TV rights also went to UEFA, which is based in Switzerland.

According to the IW, the domestic economy did not benefit from the World Cup in Germany in 2006. “It was only towards the end of the year that consumers suddenly spent more money,” said Grömling. "The reason: In January 2007, the VAT was increased from 16 to 19 percent, and consumers brought forward their spending."

mik/Reuters