Would a win at the World Cup in England boost British business? This is how the French, German, Spanish and Italian economies reacted to the victory
- Data shows that consumer confidence is boosted by domestic World Cup victories
- British consumer confidence remained around an all-time low in November
- But a victory in Qatar could boost consumers and be a boon to British business
Struggling businesses that rely on British consumer confidence could get a lifeline in December in the event of an England FIFA World Cup win, new data suggests.
Such a boost would be welcome at a time when UK consumer confidence has been eroded in recent months by 41 years of high inflation and a deteriorating economic outlook. Many consumer-facing companies have been forced to lower their expectations as a result.
However, analysis of the last four World Cup winning nations – France, Germany, Spain and Italy – suggests that any revival after a successful Three Lions campaign may be short-lived.
Business Boost: Consumer-focused businesses hope England captain Harry Kane can help inspire the Three Lions to victory
Consumer confidence in the UK remained near historic lows in November, standing at -44 for the month on an index compiled by research group GfK.
Weak consumer confidence and ultimately weaker spending have impacted business confidence, which fell to its most pessimistic level in about 13 years in October, according to the latest Accenture/S&P Global UK Business Outlook Survey.
GfK Client Strategy Director Joe Staton said: ‘External factors have changed little and with UK inflation recently reaching a new high, more bad news is inevitable.
“Household budgets remain shrouded in uncertainty with fresh jumps in food prices, energy still uncomfortably expensive, the prospect of new interest rate hikes weighing on mortgage and rent payments, potential future council tax increases and real wage pressures.
“Good news remains scarce as many people struggle to pull out their pockets during this protracted and painful cost-of-living crisis.”
Consumer confidence in France fell sharply in the months after the World Cup win
England’s quarter-final opponents, France, celebrate their 2018 victory in Russia
But as England head into Saturday’s quarter-final with champions France as the underdog, good news could be on the way in the event of a World Cup victory.
Some companies, such as pub groups, fast food chains such as Domino’s and even electronics suppliers, have already pointed to the importance of the World Cup for December’s trade.
Data collected by asset manager JM Finn shows that the countries that won the last four World Cups experienced a rise in consumer confidence in the month they lifted the trophy.
Italy’s victory shows the most notable increase in consumer confidence compared to the long-term trend
Midfielder Daniele De Rossi embraces the trophy after Italy’s 2006 win over Germany
France, Germany, Spain and Italy all saw above-trend consumer confidence growth in July 2018, 2014, 2010 and 2006, according to data from FactSet.
Consumer confidence growth in all four examples also exceeds the average month-on-month change for the period from May to September, suggesting that when a country lifts the World Cup trophy, there is a measurable boost.
Spanish consumer confidence was lifted into positive territory following the country’s victory at the 2010 World Cup
Germany’s 2014 World Cup victory provided relief against a background of declining consumer confidence
JM Finn’s Jack Summers said: ‘Success at the World Cup for the home country would not only delight fans, but could provide a welcome short-term economic boost.
“If Harry Kane can blast his side to ultimate glory and lift the trophy, our analysis of previous winners shows that a World Cup victory improves respective consumer confidence in the short term.”
However, Summers adds, “Unfortunately, this boost is short-lived and usually wears out within a few months.”
Indeed, the data shows that in every example except Italy, the country’s consumer confidence has slipped into negative territory over the past few months.
And with a difficult winter for UK consumers, it is likely that the UK will follow this trend.