Taylor Swift is taking Europe by storm, leading some analysts to predict an extraordinary financial gain as a result of her massive, sold-out concerts from Dublin to Vienna.
Swift, along with the Olympic Games in France and the Euro 2024 soccer championship in Germany, is expected to provide a shot in the arm for a continent that has verged on recession for most of the past two years and has fallen far behind. with respect to the United States.
But there is a problem: ‘Swiftonomics’, or ‘Swifteconomy’ is not real.
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He may be a megastar revolutionizing the music industry, but once the current fever has passed, it will take a microscope to detect the financial benefits.
An example is Stockholm. Nearly 180,000 fans attended its three concerts in May, half of them from abroad, and generated nearly 850 million crowns ($81 million) in revenue for the city.
That’s a big haul for Stockholm in three days, but a drop in the bucket even for Sweden’s modest economy, which ranks eighth in the European Union with annual output of $623 billion.
“This additional business volume is a big weekend boost for Stockholm and, in particular, its tourism sector,” says Carl Bergkvist, 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.”
The Chamber estimates that hotels and restaurants had a blast and even cowboy hat sales increased by 155%.
The impact on prices is equally invisible and could even be less than when Beyoncé performed in the city a year earlier, causing a temporary inflation scare. Beyoncé effect or not, Swedish inflation has fallen from a level of 10% then to just over 2% today.
“Is there a Taylor Swift effect? It is extremely small and temporary at best,” says Carsten Brzeski, an economist at ING.
“A lot of studies are done on the economic benefits before big events, but afterward you have to use a magnifying glass to find these supposed benefits in the numbers,” says Brzeski.
The verdict is the same for the Olympic Games or Euro 2024.
They are a boon for restaurants, beer sales and merch sellers, but they do not lastingly affect consumption patterns.
“The consumer spending that occurs is spending that would occur anyway and tends to be a form of substitution,” explained Professor Simon Shibli of Sheffield Hallam University.
The argument is that money spent on a concert ticket or hotel would come out of the family budget, meaning there would be less left for other expenses, such as restaurants or travel.
Danske Bank’s ironic ‘draft beer index’ showed a huge increase when Denmark played in the previous Euro against England, with bar and restaurant revenues up by a maximum of 106% compared to usual levels.
“At a microeconomic level, these developments provide a boost, but it is small and temporary,” says Piet Haines Christiansen of Danske. “They are relevant to specific sectors, such as hospitality where Taylor Swift goes or beer sales in countries where football is played.”
Last month, some local media outlets relied on a Barclays study into the spending habits of the “Swifties” to suggest that their concerts would bring in a billion pounds to the British economy.
But aside from the likely substitution effect they have on other expenses, there’s also the fact that much of Swift’s tour revenue will end up in the United States, dampening an already small local economic benefit.
For economies the size of the British or those of continental Europe, these transfers would not move the dial of their trade accounts either: the euro zone, made up of 20 countries, had a balance of exports over imports of no less than 39,000 million euros in only April.
($1 = 10.4619 Swedish crowns)
With information from Reuters
