The European Championship which is scheduled to take place in Germany this summer is unlikely to ease the country’s struggles for growth, a study by a famous institute and seen by Reuters revealed on Friday.
UEFA EURO 2024 will begin in Munich on Friday, June 14 and finished with the final in Berlin on Sunday, July 14.
"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 been in a tight spot since Russia's February 2022 invasion of Ukraine, which increased energy costs. The country is now in its fourth consecutive quarter of negative growth, which is impacting 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.
— Additional input from Reuters
