Dr Charles Tannock

Member of the European Parliament for London

Economic benefits of Euro 2012 ‘swamped’ by eurozone crisis

Public Service Europe - 28 May 2012

Many of the economic benefits for Poland and Ukraine of hosting the Euro 2012 football tournament will be "swamped" by the effect of the eurozone crisis, despite the positive investment in stadia and infrastructure, Capital Economics has said. The London-based think-tank also warned of the damaging effect of negative publicity surrounding the tournament. It comes after a former international footballer urged fans to stay at home because of the risk of racist attacks and amid political tensions between the European Union and Ukraine.

In a research note published today, Capital Economics said Euro 2012 was "an exception to the general rule that major sporting tournaments do not tend to have a significant impact on economic growth in the host countries". But it added that Poland and Ukraine had already seen most of the "boost to growth" brought by holding the championships, and the immediate effect of higher tourist spending over the summer would be "more than outweighed by potential downsides from the deepening crisis in the eurozone".

According to the study, Euro 2012 related investment over the last four years amounted to €25bn in Poland and €11bn in Ukraine. At respectively 1.3 per cent and 1.7 per cent of gross domestic product each year, those figures were "much greater as a share of GDP than is usually the case" with similar sporting events. Polish authorities have said that the tournament will create up to 60,000 jobs, equal to 0.4 per cent of the labour force. Based on that estimate, Capital Economics predicted that new jobs in Ukraine as a result of hosting Euro 2012 could be equivalent to 1 per cent of the work force, a "significant" amount of job creation.

However, the think-tank said that "the bulk of these jobs are likely to be both temporary and relatively poorly paid". And while there is expected to be a "surge" in tourist spending, possibly worth 0.2 per cent of GDP in Poland and 0.4 per cent in Ukraine, the report suggests that estimates of an extra one million visitors to each country "may prove optimistic – particularly in the light of recent bad publicity surrounding the tournament".

Former England footballer Sol Campbell has warned fans to stay away from the championships for fear of racist attacks. "Stay at home, watch it on TV," he told the BBC. "Don't even risk it … because you could end up coming back in a coffin." The families of two black England players, Theo Walcott and Alex Oxlade-Chamberlain, have said they will not travel to watch the team play, while Campbell said Poland and Ukraine should not be hosting the tournament. Meanwhile a number of senior European politicians have said they will not attend matches in Ukraine in protest at the country's imprisonment and alleged mistreatment of former prime minister Yulia Tymoshenko.

British MEP Charles Tannock has called for England's matches to be moved from Ukraine to Poland, and said the boycott by EU leaders such as European Commission president José Manuel Barroso "will have an effect". He added: "That will send a message to Kiev: that we want them to grow into a modern European state and ultimately to join the EU – but that will require much higher standards of political behaviour than we have seen of late."

"The bulk of the boost to growth has derived from increased investment, which has now taken place," said the Capital Economics study, by economists Neil Shearing and Liza Ermolenko. "Increased revenues from tourist spending are likely to be much smaller in comparison. Moreover, the key point is that any benefits from staging Euro 2012 will be swamped by the potential downside from the escalating crisis in the eurozone."
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