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England fans drink beer in London
England fans drink beer – and help boost the economy – as they watch the World Cup on a big screen in London. Photograph: Tolga Akmen/AFP/Getty Images
England fans drink beer – and help boost the economy – as they watch the World Cup on a big screen in London. Photograph: Tolga Akmen/AFP/Getty Images

UK economy gets a kick from World Cup and heatwave

This article is more than 5 years old

Bank of England says England win can help Britain recover from Brexit-induced slowdown

England’s World Cup success combined with the heatwave is helping the UK economy recover from the slowdown triggered by the Brexit vote and heavy snowfall earlier this year, according to economists.

Mark Carney, the governor of the Bank of England, believes winning the trophy in Moscow at the weekend would be an “unadulterated, unalloyed good” for the whole of the British economy.

Threadneedle Street’s chief economist, Andy Haldane, also argues the rise in consumer spending amid the “feelgood factor” for much of Britain (England represents 86% of the economy) could support the need for higher interest rates.

England fans are expected to buy as many as 10m additional pints of beer as Gareth Southgate’s men face Croatia on Wednesday, with an estimated boost for the economy worth as much as £30m. According to the British Beer and Pub Association, the taxman is likely to cheer along as well thanks to an additional windfall worth £4.5m from beer duties. John Lewis also reckons England’s success has helped champagne sales to fizz.

Consumer spending in pubs surged by a third on the day of England’s opening match of the World Cup against Tunisia, according to Barclaycard.

Mark Gregory, the chief economist at consultancy EY, said: “Retail sales are on an upward trend. You might see spending on food, drink and things like replica kit – thanks to the feelgood factor and parties – continue over the next few months.”

Although there are benefits, there are also drawbacks from footballing success. Some retailers will benefit more than others, as higher beer and barbecue sales erode the spending power of consumers for purchases of other goods.

There are also limits to how a successful England football campaign can boost the wider economy. When the team last reached a World Cup semi-final, in Italy in 1990, the economy only grew by 0.7% across the year as a whole and slipped into recession after the third quarter.

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Back in 1966, when England won the World Cup, the UK was one year away from the then prime minister, Harold Wilson, devaluing the pound amid weak economic growth and a ballooning trade deficit.

The picture could be much the same today, despite the sugar rush from the success on the football pitch, as Britain prepares to leave the EU.

John Hawksworth, the chief economist at PwC, said: “I don’t think any of it really affects the underlying trend in the economy. The bigger issues are what really determines the underlying trend in terms of productivity growth, Brexit and what’s happening in the global economy.”

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