Kick-off is in a week. The German national team will open the European Championships in their home country with a match against Scotland. Hopes are high for the tournament – and not just from a sporting perspective. Can the home European Championships compensate for the economic weakness of the German economy, or even bring about an upturn?
Several economic and labor market researchers are currently looking into this question. And little in the results of their analyses gives hope for a “summer fairytale” for the domestic economy.
Nicolas Ziebarth, for example, head of the research department for labor markets and social insurance at the Leibniz Centre for European Economic Research (ZEW), points to the costs associated with the tournament: “Hosting the European Football Championship is expected to cost German taxpayers 650 million euros. That is a large sum that the federal government, the states and the cities have to bear in times of tight budgets.” In addition, there is a three-digit million amount for the broadcast on public broadcasting.
Some companies would benefit from the tournament. Tourism in the host cities through higher overnight stays, for example, or merchandise providers such as the supplier Adidas. But the bottom line is that the European Championship probably does not have the power to ensure an economic upturn in the crisis-ridden country.
“Economic studies consistently come to the conclusion that the positive economic impulses generated by major events merely displace the usual tourism effects and that there is no net effect on economic performance,” says Ziebarth.
The tournament has not yet had any major impact on the job market. The spring recovery is even weaker than usual, says Andrea Nahles, head of the Federal Employment Agency (BA). The additional need for security guards, stewards and employees in the catering industry is likely to be short-term, says economist Ziebarth.
This is precisely what a survey of the job centers and employment agencies in the ten host cities by WELT AM SONNTAG from last month underlines. “No significant increase in jobs for the European Championships,” reported Cologne, the demand was “marginal” and limited to service and security. The short-term personnel requirement could be covered by mini-jobs, said Leipzig.
“In principle, the potential labor market effects of the 2024 European Championship should not be overestimated,” says Enzo Weber from the Institute for Employment Research (IAB). “Even if there is additional value creation and jobs, these will most likely not be permanent,” he says.
A comparable example from the recent past is provided by our neighbouring country France. The European Football Championship in 2016 brought the French economy 1.2 billion euros. Just over half of this was due to spending by visitors from abroad, as the Centre for Law and Economics of Sport (CDES) calculated at the time.
However, in relation to the total economic output of 2016, the amount was hardly significant: 1.2 billion euros corresponded to around 0.05 percent of the gross domestic product.
German economists have also registered hardly any noticeable effects in previous tournaments. The mood in the German economy has hardly improved in previous tournaments, as a new analysis by the ifo Institute shows. “At the 2006 World Cup in Germany, there was initially a sense of anticipation in the ifo economic surveys. In the six months prior, the probability of ‘better business’ in the coming months rose by 1.1 percent,” says Klaus Wohlrabe, head of the ifo surveys.
“After the World Cup, companies actually found their business situation somewhat better; the probability of saying ‘good’ rose by 1.1 percent. During the World Cup and afterwards, however, there were no further effects on expectations,” said Wohlrabe. “We suspect something similar will happen now for the European Championships.”
According to the study, the economic effect of the hundreds of thousands of guests who travelled to Germany for the 2006 World Cup was more of a perceived one. The ifo Institute examined the hospitality industry, i.e. hotels and restaurants, as well as the food and beverages sector during the 2006 World Cup. “We found no significant effects there,” says Wohlrabe.
The economists also analyzed the European Championships of the past 20 years. It emerged that German companies were somewhat more satisfied with the current business situation and somewhat more optimistic about the coming months during the tournaments.
The probability that they would tick “good” when asked about the current economic situation was 0.5 percent higher during a European Championship. The probability of expectations rose by one percent, as the long-term analysis shows. “After a European Championship, the probability that companies would tick the two good categories drops slightly. There was no anticipation anyway,” was Wohlrabe’s sobering conclusion.
Economist Ziebarth, however, points out the effect on external perception. The 2006 World Cup showed that seemingly irrelevant events, such as the results of football matches, can have a positive influence on personal and social perceptions of the economic outlook. “Especially at a time when Germany’s economic decline is being discussed and the transformation of the economy is worrying many people, a collective event can help to send a positive jolt through Germany and strengthen the sense of community.”
