Economists keep eye on the ball with ‘soccernomics’

NO SOCCER fan would tune in to an investment banker providing live commentary and analysis on the World Cup, but nothing will stop some banks from coupling a day job and a passion, with some interesting results.

In a report called Soccernomics 2006, Dutch bank ABN-AMRO argued that the best outcome for the global economy would be a European final where Germany met Italy, and lost.

The British-based Centre for Economics and Business Research estimated the World Cup will provide a consumption boost worth the equivalent of close to $25 billion (€19.53bn), most of it netted by Europe, and primarily by 2006 tournament host Germany.

ABN AMRO’s ideal economic final ended up wide of the mark as Germany faced Italy in the semi-final last night, but the arguments for a European final remained intact as France prepare to battle Portugal in the second semi tonight.

“We are convinced that soccer has an impact on the economy,” said Ruben van Leeuwen and Charles Kalshoven, ABN AMRO’s research duo.

Their premise is that the United States spends far more than it can afford and, like any household, it will come unstuck one day and drag everyone down because of the crushing overdraft, or the global financial imbalance, as economists call it.

Europe’s large economies need to become bigger spenders to keep the world on an even keel, which is where the “pick-me-up” of ABN AMRO’s soccernomics theory really kicks in.

As this year’s host, Germany’s huge but long-dormant economy gains directly from investment in stadiums and infrastructure, floods of tourists and a month of glorious, planet-wide publicity.

Italians would enjoy the soul-lifting experience of victory, which would also lift spending by consumers, and in turn growth.