European Championship won’t save German economy, study shows
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Foreign Minister Annalena Baerbock, Economy and Climate Minister Robert Habeck, German Chancellor Olaf Scholz and Finance Minister Christian Lindner pose with the official match ball to mark the 100-day countdown to the opening game of UEFA Euro 2024 in B
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BERLIN(Reuters) – The European Championship to be held in Germany this summer is unlikely to turn into a summer fairytale for the euro zone’s largest economy as it struggles for growth, a study by a leading institute and seen by Reuters showed on Friday.
“The experience of the Football World Cup in 2006 shows that major sporting events are not economic fireworks,” said Michael Groemling, head of the Institute of the German Economy IW Koeln.
Germany’s industry-heavy economy has struggled since Russia’s February 2022 invasion of Ukraine, which pushed up energy costs, and it is now in its fourth straight quarter of zero or negative growth, weighing on the whole euro zone.
Many consumers are likely to use Euro 2024 as an opportunity to buy a new television, invite people to a public viewing or drink one more beer while watching the games, he said.
“But they will save money elsewhere: bratwurst instead of a restaurant, TV instead of going to the cinema,” said Groemling. “As a result, consumer spending is not necessarily increasing, but shifting.”
The event could provide a small economic boost for the 10 cities hosting the games. However, this will not result in higher gross domestic product at the end of the year, according to the IW study.
Germany’s gross domestic product (GDP) shrank by 0.3% in 2023, making it the world’s weakest-performing major economy. Modest growth is expected this year.
It is true that some money will still flow into some stadiums in the form of modernisation work. “However, no new roads or other infrastructure will be built, as was the case with the World Cup in South Africa, for example,” said Groemling.
Income from the sale of TV rights also went to the football association UEFA, which is based in Switzerland.
However, psychological effects should not be underestimated. “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 organisational point of view makes the location more attractive.
“Image cultivation is an enormous gain, especially against the backdrop of weak direct investment,” said Groemling.
