Despite a final of the Blues, the morale of households affected by inflation takes over the economy which does not benefit from the “World Cup effect”.
Source AFP
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© Daniel FOURAY / MAXPPP / PHOTOPQR/WEST FRANCE
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Lhe presence of the Blues in the final of the World Cup is supposed to represent a boon for the French economy. However, several economists interviewed by Agence France-Presse point at most to a positive effect of competition on the purchase of television sets. Less than 48 hours from the France-Argentina final on Sunday, the Rexecode institute thus expects “no significant positive effect” from the World Cup on the French economy.
“For households affected by inflation which is eroding their purchasing power and depreciating their heritage, the mood is for savings” rather than consumption, the institute told AFP. “There is not much macroeconomic impact to expect” from the epic of the Blues in Qatar, confirms Julien Pouget, head of the economic department at INSEE. Household morale and consumer spending, the two closely watched indicators of the National Institute of Statistics and Economic Studies (Insee), should hardly be influenced by the World Cup.
READ ALSOWhy foreign investors love French footballIn July 1998, during the first world title of the Blues, moreover at home, consumer confidence was certainly appreciated. But this progression “was part of an upward trend at work for two years and which continued thereafter”, analyzes Julien Pouget. The INSEE figures confirm this: between June and July 1998, household morale rose by three points, standing well above its long-term average, but still a good distance from its historical record.
Televisions are “increasing the trade deficit”
After France’s second world title in July 2018, household morale only rose by one point, an increase that was not enough to lift French confidence above average. Household morale is only an “indicator of confidence in the economic situation, it is not an indicator of overall confidence, in all aspects” of French life, recalls Julien Pouget. If certain major non-economic events, such as the health crisis or the war in Ukraine, are likely to influence it, this is not the case for major sporting events, insists the statistician.
Another indicator closely watched and often described as the engine of French growth, household consumption expenditure on goods is also only marginally affected by the World Cup. “What can happen in terms of consumption are effects on television purchases”, which tend to increase during the Worlds, assures Julien Pouget.
READ ALSOSports betting: the other winners of the World CupBut televisions are “often imported products”, nuance Thomas Grjebine. Consequently, when they sell like hot cakes, “this has the effect of increasing France’s trade deficit”, argues the economist of the Center for Prospective Studies and International Information (Cepii), an organization attached to Matignon. In addition, given its sometimes high cost, the purchase of a television can be made “to the detriment” of the purchase of other products, adds Julien Pouget.
“No massive effect”
Without this necessarily being linked to a “World Cup effect”, the INSEE archives indicate a 2.4% increase in household consumption in July 1998 and a much more modest increase of 0.1% in July 2018. In summary, a good course for the Blues at the World Cup “can’t hurt, but has no massive effect” on the French economy, smiles Julien Pouget.
The organization of a major sporting event can, on the other hand, “boost a certain number of public investments” in the host country (transport or infrastructure), he continues. This could benefit France, which is about to host the Rugby World Cup in 2023 and the Olympic Games in 2024. On the occasion of the Olympics, France also hopes to boost its revenue from tourism, a sector that accounts for between 7 and 8% of GDP. But here too, the effect on tourism of the planet’s flagship sporting event “has not been demonstrated”, warns Thomas Grjebine.