What do Taylor Swift and the weather have in common? They both affect the economy
The health of the economy can affect your finances. A strong economy could lead to the value of investments rising, or the need to raise public finances may mean your tax liability increases. However, predicting how the economy will perform can be difficult as numerous factors can have an impact.
When you think about what affects the economy, sunny weather and Taylor Swift concerts might not be the first thing that comes to mind. Yet, data shows they could both deliver an important boost to GDP. Here are just four examples of events that might influence economies.
1. Taylor Swift’s tour is projected to generate $5 billion of consumer spending in North America alone
Taylor Swift’s current Eras Tour is the perfect example of how music can have a huge effect on the economy.
The tour has almost 150 concert dates and will cover five continents. According to TIME, it’s projected to gross $2.2 billion (£1.79 billion) in North American ticket sales alone.
It’s not just Swift that’s benefiting, but local economies too.
In the US, the Eras Tour is projected to generate close to $5 billion (£4 billion) in consumer spending. Typically, every $100 (£81) spent on live performances in the US generates an estimated spend of $300 (£243) of local spending on hotels, food, transportation, and more. Swift fans are spending far more – an estimated $1,300 – $1,500 (£1,056 – £1,218) – resulting in significant boosts to local economies.
The first UK stop on the tour will be in Edinburgh in June 2024, and it could provide a welcome lift in sales for local businesses.
Swift is far from the first musician to benefit local economies.
In fact, the International Monetary Fund previously referred to the Beatles as Britain’s “secret weapon” in the 1960s. The band’s “invisible export” helped to stave off devaluation. Almost 50 years after the Fab Four split up, the Beatles still bring in millions of pounds every year to Liverpool’s economy as fans flock to where it all started.
2. The government estimates an extra bank holiday would cost £1.36 billion
This year, the UK enjoyed an extra bank holiday on 8 May to mark the coronation of King Charles III. While you might have enjoyed the day with family and friends, it may have affected the economy more than you think.
For some businesses, the extra day off meant a lower output. However, others benefited from workers having more free time and using the bank holiday to go out.
In May, the Office for National Statistics (ONS) said: “A range of manufacturing industries and businesses within construction cited the bank holiday for the coronation of King Charles III on Monday 8 May as reason for reduced output.
“On the positive side, we had comments suggesting industries in the arts, entertainment, and recreation sector benefited from the extra bank holiday. There were also comments on both increased and reduced output received in the accommodation and food services sector.”
In 2022, when the UK had two extra bank holidays, to mark the Platinum Jubilee and the Queen’s funeral, government modelling put the cost of an extra bank holiday at £1.36 billion due to business closures, disruptions to production schedules, and premium payments for employees.
However, according to the BBC, consultancy firm PwC says, once the benefits are considered, the cost would be lower at around £831 million.
3. Wimbledon fortnight delivered a £200 million boost to London in 2023
It’s not just the world’s biggest pop stars that get people spending more money – sporting events have a similar effect.
More than 11 million people tuned in to watch Spanish star Carlos Alcaraz’s victory over Novak Djokovic in the Wimbledon men’s singles final this summer. Many tennis fans weren’t just watching the game, but spending too.
The Evening Standard reported that Wimbledon fortnight delivered a £200 million boost to the London economy, making it the most valuable annual sporting event in Britain. Local restaurants, cafes, and shops in Merton reported takings were up between 20% and 200% during the tournament.
Plans by the All England Club to increase capacity through development could mean the economic boost to the capital may rise to £268 million in 2031.
Despite controversies, Qatar proved how global sporting events can drive economic growth when it hosted the FIFA World Cup at the end of 2022.
S&P Global reports Qatar’s real GDP grew by a strong 8% in the final quarter of 2022 on a yearly basis.
Hosting events like the World Cup and Olympics can have a long-lasting effect too. For example, countries may benefit from increased tourism or foreign spending.
4. The Great British weather has a direct effect on GDP
Talking about the weather is often considered a British pastime. Yet, you might be surprised how much economists discuss rain and sunshine.
Gloomy, rainy weather can harm some industries. Construction sites might have to pause work and people are more likely to stay home rather than venture out. In the summer months, outdoor events and trips to a pub garden may deliver a boost. Yet, on the flip side, warmer weather could reduce productivity as families plan holidays.
Releases from the ONS often comment on the weather and the effect it’s had on the economy.
In fact, in June 2023, the ONS noted that increased output from accommodation and food services was partly due to “good weather”.
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The economic outlook may seem uncertain at times, and it might mean you feel anxious about your own finances. Having a long-term financial plan that considers the potential ups and downs of the economy could put your mind at ease.
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Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.