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She may be a megastar revolutionising the music industry, but once the excitement wears off, you will need a magnifying glass to spot the economic benefit
Published : 28 Jun 2024, 02:15 PM
Taylor Swift is taking Europe by storm, prompting some pundits to envisage an economic windfall as fans flock to dozens of sold-out shows from Dublin to Vienna and beyond.
It is hoped Swift, along with the Olympic Games in France and the Euro 2024 football championship in Germany will provide a shot in the arm for a continent that has just skirted recession for most of the past two years and badly lagged the United States.
But there is one problem: "Swiftonomics" is not actually real.
She may be a megastar revolutionising the music industry, but once the excitement wears off, you will need a magnifying glass to spot the economic benefit.
Take Stockholm as a case in point. Close to 180,000 fans attended her three shows in May, with half of them coming from abroad and generating close to 850 million crowns ($81 million) in turnover for the city.
That is a great three-day haul for Stockholm but a drop in a bucket even for the modestly-sized Swedish economy, which ranks eighth in the European Union with annual output of $623 billion.
“This extra turnover is a great weekend boost for Stockholm and in particular, its tourism sector," says Carl Bergkvist, the Chief Economist at the Stockholm Chamber of Commerce.
"But it’s just that — a weekend, with no visible or significant impact on overall economic growth.”
Hotels and restaurants made a killing and even cowboy hat sales surged 155%, the Chamber estimates.
The impact on prices is similarly invisible and could even be smaller than when Beyoncé performed in the city a year earlier, sparking a temporary inflation scare. Beyoncé effect or not, Swedish inflation has since fallen from 10% to just over 2% now.
"Is there a Taylor Swift effect? It’s extremely small and temporary, at best," said Carsten Brzeski, an economist with ING.
"There is copious research in the run-up to big events outlining the economic benefits but after the fact you need a magnifying glass to find these so-called benefits in the numbers," Brzeski said.
The verdict is the same for the Olympics or Euro 2024.
They are a boon for restaurants, beer sales and sellers of "merch" but do not durably affect consumption patterns.
"The consumer spending that occurs is an expenditure that would happen anyway and tends to be a form of substitution," explained Professor Simon Shibli at Sheffield Hallam University.
The argument is that cash spent on a concert ticket or a hotel would come from a family's budget, meaning there would be less left for other expenditures, such as restaurants or travel.
Danske Bank's tongue-in-cheek "draft beer index" showed massive surges when Denmark played its previous European Championship - topping out at a 106% rise in pub and restaurant receipts for a game against England compared to the usual take.
“On a micro level, such events do provide a boost but even that is small and temporary," Danske's Piet Haines Christiansen said. "They are relevant for specific sectors, like for hotels and catering wherever Taylor Swift goes or for beer sales in countries that are playing football."
Some local media last month jumped on Barclays research about the spending habits of Swifties to suggest her concerts would bring in one billion sterling for the UK economy.
But besides the likely substitution effect they have on other spending, there is also the fact that much of the income from the Swift tour will end up in the United States - muting an already small local economic benefit.
For economies the size of Britain or those in continental Europe, any such transfers would not move the dial on their trade ledgers either: the 20-country eurozone had a balance of exports over imports of no less than 39 billion euros in April alone.
