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Analysis | The UK could use a World Cup win – for the economy

Remark

The World Cup usually gives the British economy a significant boost. With any luck, the sun will shine and England will come through the tournament in a decent manner, encouraging people to flock to pubs and home viewing parties. But even before the first kick-off this year, one of those ingredients will be missing.

The competition, which starts on Sunday, is the first to take place in the British autumn. Until now, this has happened in the warmer months, which automatically boosted the feel-good factor and got the money flowing through the till. The calendar and controversies surrounding the Qatar Games explain why the 2022 event may be a more muted affair for retail and hospitality.

Given the shorter days and colder temperatures, fans will mostly have to watch games indoors. That limits the number of people pubs can serve, Shore Capital analysts note. Even many home viewers are likely to have fewer guests than in the summer when they can use their balconies and backyards.

Some pubs may be able to reuse the Covid-era facilities they’ve invested in, allowing people to drink and dine outside. This will benefit the strongest operators, such as Young & Co.’s Brewery Plc, which has over 100 pubs with tents and outdoor heaters, and Fuller Smith & Turner Plc, where 70% of the estate has outdoor space that can be used to show games. Plus, they don’t have to deal with social distancing.

The tournament also comes in the midst of the cost-of-living crisis, which may also take some of the exuberance away.

As a result, research by GlobalData for VoucherCodes estimates that retail spending will be 19% lower than the 2018 Football World Cup and 41% less than the 2021 UEFA European Football Championship. Hospitality spending will be 10% lower than in 2018 and less than half by 2021.

Electronics retailer Currys Plc is running a series of promotions to boost TV sales, but the economic situation may reduce demand for expensive gadgets. England vs the US on November 25 at 7pm, although more promising for pubs, also falls on Black Friday, so it’s not clear what impact this will have on what would normally be a big online shopping day. Many retailers have brought their Black Friday promotions forward.

That said, the World Cup does offer the opportunity for some extra turnover for supermarkets and catering companies.

Next to the weather, England’s performance is the other big determinant of how much people will spend. The 2018 World Cup was blessed with both ingredients: not only did it coincide with a heat wave, but England made it to the semi-finals. And victory in UEFA Women’s Euro 2022 came amid a long hot summer. Even with more seasonal temperatures a year earlier, reaching the final of the European Championship in England boosted sales. So far this fall has been warm, which may lift the mood.

If the stars align and England or Wales – neither Scotland nor Northern Ireland qualified – progress, matches could be combined with festive gatherings to boost trade.

Supermarkets could see a strong run from Halloween through the Christmas holidays. While football fans may buy less fresh food, such as higher-margin barbecue meats and salads, they will stock up on other snacks, such as pizza, party food, and dinner deals. And booze is an eternal seller.

As for the pubs, they could see a boost in sales from the end of November. There can be more business at this typically quiet time, especially on Mondays and Tuesdays when some of England and Wales’ early matches take place. That could carry over nicely into the Christmas trade, which will already be supported by a return of office parties. Youngs estimates that bookings for England and Wales’ group stage matches could generate around £400,000 ($474,360) in sales. Early visits should further boost revenue.

Of course there will be other challenges. The final is on Sunday, December 18, so the final stage of the tournament may conflict with Christmas dinner reservations. Restaurants and pubs may have to struggle to satisfy fans and families alike. Meanwhile, grocers would have to withstand the twin demands of Christmas trade and football, something Tesco Plc Chief Executive Officer Ken Murphy has described as a “bit of a curveball”.

England’s performance and the British weather have something else in common: there is always plenty of room for disappointment. But with the full force of the cost of living crisis yet to be unleashed, retailers and hospitality establishments will cling to every crumb of comfort.

More from Bloomberg’s opinion:

• Burberry is on its way to luxury powerhouse Status: Andrea Felsted

• UK housing market is desperate again: Merryn Somerset Webb

• British families are already being hit by secret taxes: Stuart Trow

This column does not necessarily reflect the views of the editors or Bloomberg LP and its owners.

Andrea Felsted is a Bloomberg Opinion columnist on consumer goods and retail. Previously, she was a reporter for the Financial Times.

More stories like this are available at bloomberg.com/opinion

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