World Cup fever has UK economy poised for cash injection

The British economy will score a significant victory next month as football becomes an obsession during the World Cup.

A surge in retail sales, advertising and bookmakers' takings are forecast to deliver a £1.25 billion ($3.66 billion) economic boost over the summer.

Should England win their first trophy for 40 years in Berlin, then history suggests there will be a more sustained economic benefit.

Much of the retail sector is relying on the tournament to deliver a shot in the arm through sales of alcohol, convenience food, replica football shirts and televisions.

The £200 million boost during Euro 2004 is tipped to be dwarfed if England reach the later stages as the bookmakers predict.

The British Retail Consortium has predicted that World Cup-related purchases will increase consumer spending by an extra 50 per cent to £3 billion during each month of the tournament.

The Centre for Economic and Business Research (CEBR) forecasts that the tournament will provide a short-term boost of £1.25 billion, mainly from consumer spending and higher business spending on advertising.

It estimates that an additional £750 million will be spent regardless of how England fares in the tournament.

"The retail sector has been in decline since July 2005 and ... there has been no real sign of a permanent upturn yet. However, we see the World Cup as a real opportunity for the retail sector to change its fortunes" Natasha Burton, of the retail information supplier Footfall, said.

Analysis by Footfall of consumer behaviour during Euro 2004 showed increases in high street spending in the days before England's three group matches of between 3.6 and 10.8 per cent.

Sales the day before England's opening match against France rose by 10.8 per cent, although there were week-on-week drops on the day of the match.

The brewing industry can reasonably expect to exceed the £165 million increase in pub takings during the 2002 World Cup in Japan and Korea, when breakfast time kick-offs meant more restraint at the bar.

The booziest game last time round was a Saturday lunchtime kick-off against Denmark when eight million pub drinkers toasted an England victory by sinking £50 million worth of alcohol, according to figures from the British Beer & Pub Association.

The CEBR reckons total spend on alcohol in pubs, clubs and off licenses should England reach the semi-final will reach £285 million, or a 1 per cent increase in the industry's annual revenues.

Sales of flat-screen high-definition televisions, which cost more than £1,000, have risen by 250 per cent in recent weeks.

Sky television is dealing with a backlog of orders for its HDTV set-top boxes and cannot guarantee they will be fitted by the time the tournament starts on 9 June.

Currys, the chain owned by DSG International, is selling one flat-screen TV every 15 seconds.

William Hill, the bookmaker, has claimed that the World Cup will be the UK's biggest ever betting event, with a total of £1 billion expected to be waged on the tournament.

However, the World Cup economic dividend may appear to be something of a paradox to some employers.

Levels of absenteeism are expected to rise to 20 per cent during group matches at a daily cost to employers of £100 million, according to research by Active Health Partners.

"In the case of the 2005 Ashes, absenteeism rose 20 per cent at the start of the series and the final Test match it increased to 30 per cent.

We can safely assume that these levels will be matched - if not overtaken - during the World Cup," a spokesman said.

The CEBR reckons that £300 million extra will be spent in the advertising industry as tournament partners and associated sponsors capitalise on their branded World Cup campaigns.

However, a much less optimistic mood prevails among media buyers where some say the World Cup has lost its appeal to advertisers.

Chris Hayward, the head of broadcast for Zenith Optimedia, sees no reason to alter his forecast of double digit percentage falls in June and July in a UK television advertising market valued at £3.4 billion.

"In the past people have saved up at a marketing level every four years but they tend to see football as an all-year-round prospect now," he said.

The Premier League and the Champions' League compete for advertisers' money, he said.

The ultimate World Cup victor can expect their nation's economy to grow by 0.7 per cent, the "Soccernomics 2006" report by ABN Amro predicted.

"We are convinced that soccer has an impact on the economy," the report said.

"The effects at macro-economic level and on the financial markets are not so great that they can turn a recession into a boom, but they should not be underestimated."Since 1970, the report notes, there have only been two major exceptions to the winner-takes-all rule: in 1974 and 1978 when the German and Argentine economies respectively experienced a sharp downturn (in the latter case becoming a deep recession).

An England win may provide politicians with significant political capital, but Gordon Brown is being more circumspect about the tournament's impact in the nation's coffers.

A spokesman for the Chancellor, who will attend England's match against Sweden in Cologne, said the tournament would not have an "especially large impact" on the economy.

"The public finances forecast is consistent with the overall economic forecast, and while that obviously takes into account seasonal fluctuations, our past experience is that higher-than-expected consumption of some goods and services leads to lower-than-expected consumption of others," he said.

Although the chances of Germany winning the tournament on home soil appear slim according to football experts, the economic forecasters reckon that in one sense they cannot lose: the host nation stands to reap £300 million from tourism.

"Germany is not a prime tourist destination but [because of the tournament] it will become exactly that at the expense of more traditional holiday destinations such as Spain and Portugal," Simon Shibli, from the Sport Industries Research Centre at Sheffield Hallam University, said.

- INDEPENDENT