FIFA World Cup 2010 adds £1.6 billion GDP to UK economy

FIFA World Cup...

The FIFA World Cup is the biggest sporting event in the world, trumping even the Olympics for revenue and television viewers, and so it's no surprise that the centre for economics and business research (cebr) has estimated that the tournament in south Africa will result in a £1.6 billion boost to an economy coming out of a recession.

According to the cebr, the £1.6 billion injection into the economy will be due to consumer expenditure and business spending on advertising, although this will be partially offset by workforce absenteeism.

Of course, a large percentage of English football fans will only follow the tournament as long as the English national team are still competing, so the estimates from the cebr are due in part by the bookmakers' pre-tournament predictions that England will reach the semi-finals. By the cebr's reckoning, England will beat all the teams with longer odds than themselves, and lose to those with shorter odds, like Spain and Brazil.

Absenteeism not to play a large role

Unlike the 2002 tournament in Japan and South Korea, absenteeism is not likely to take a large chunk out of the GDP for June and July, due mainly to the two hour time difference between the UK and South Africa. In fact, the cebr reported that the impact of the timing of matches in the 2002 tournament probably made the overall economic impact of the World Cup negative for the UK economy.

If England do win their matches, and win their group, the only game that would disrupt the working day would be against Slovenia, which kicks-off at 15.00 on Wednesday 23 June, which would likely have a negative impact on productivity. All other England games would be at 7.30, so in theory, the only disruption would arise from late night drinking sessions spilling over into the early morning.

The cebr estimates that the UK GDP will lose around £0.9 billion due to absenteeism and productivity loses.

The convenient timing of the games means good news news for pubs, off-licenses and supermarkets, all who can expect bumper sales and profits for the tournament duration. ASDA estimates that beer and wine sales will increase by 37 percent and 41 percent respectively during the tournament as people hold 'World Cup parties'. A blast of good weather would compound this impact.

Verdict Research is expecting total retail expenditure will increase by £1.3 billion throughout June and July, particularly if England is successful in the tournament. This represents a 5.8 percent rise in total expenditure.

"While the growth of sales partly depends on how long the English team remains in the competition, the World Cup will have a noticeable effect on the retail and leisure sectors," says Phil Duffy of MCR.

"Sales in bars and pubs will rocket while the games are on, and supermarkets will benefit from increased spending on groceries and alcohol by those watching at home," he continued. "However retailers need to be wary of having too much of certain stock in the event that the English team does not get through to the next rounds."

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