Return to Insights

Victoria Pulls out of Hosting Commonwealth Games

Doubt for the Commonwealth Games, warning of another energy crisis, Germany's car production slows, and YouGov poll shows Britons want to rejoin the EU.

Doubt has been cast over the 2026 Commonwealth Games after Victoria pulled out, citing rising costs. Victorian Premier Daniel Andrews yesterday maintained that expected costs had now nearly tripled and that it was no longer affordable for the Australian state to host them. Accordingly, the originally forecasted A$2.6bn had inflated to A$6bn, with Andrews stating that this bill was more than twice the expected revenue that could be generated from the games.

This episode casts further doubt on the Commonwealth Games more generally given difficulties in finding hosts due to extortionate costs. For example, in 2017 Durban, South Africa had to relinquish hosting the 2022 Commonwealth Games due to financial issues and falling to keep up with deadlines.

The rising cost of hosting major sporting events has gained a great deal of publicity recently, particularly after the World Cup in Qatar last year. As we looked at then, The Economist

wrote a piece on the fact that the overwhelming majority of host counties end up running a net-deficit and that this is indicative of sports events worldwide. The Economist stated: “Between 1964 and 2018, 31 out of 36 big events (such as World Cups or summer and winter Olympics) racked up chunky losses, according to researchers at the University of Lausanne. Of the 14 World Cups they analysed, only one has ever been profitable: Russia’s in 2018 generated a surplus of $235m, buoyed by a huge deal for broadcasting rights.” The article also went on to explain that though FIFA only cover the operational costs of the event, they reap the rewards of ticket sales, sponsorship and broadcasting rights. This dynamic means that fewer counties are bidding to host great international sporting events as costs seemingly continue to rise.

International Energy Agency Warn Over Another Energy Crisis

The International Energy Agency is warning of another energy crisis, despite efforts by European countries to fill their storage sites to the brim. Despite the frantic decoupling efforts from Russian energy supplies over the last fifteen months, Europe still relies on Russia for around 10% of gas via pipelines and other supplies in liquified form.  Europe are targeting 90% full stockpiles by November and that will almost certainly be achieved, with them being around 80% at the moment. However, if we were to see all three of the following; Russia turn off supplies, a cold winter, LNG in high demand from elsewhere in the world, then Europe might emerge from winter with as little as 20% in the tank, which would be a recipe for severe price action. As Europe suffers under the heat dome, gas prices are some 90% lower than they were around this time last year. The FT has more (ft.com/content).

German Car Production in Slow Lane

Germany’s big three car manufacturers have come out with some sobering numbers; production remains 20% lower than pre-pandemic levels. The industry may well still be recovering from the rollercoaster of the pandemic, where manufacturing was shut, demand fell off a cliff and then roared back to life, but was blighted by supply chain and semiconductor issues. These might be fixed now, but in that time we’ve seen consumers looking closely at their spending, particularly in electric vehicles where these companies have invested heavily and orders are down between 30-50% versus last year, and also competition from China in the EV market is starting to hurt – even in the German home market, where Geely and Nio have made up 7% of EV sales in the first half of this year. Of course, falling demand means either cutting production or cutting prices, both routes would lead to either job losses in Germany and the sector currently employs around half a million people and generates around 400bn EUR in revenues.

YouGov Poll Suggests 51% of Britons Favour UK Rejoining EU

A YouGov poll has indicated that around 51% of Britons would vote for the UK to rejoin the EU, its highest level since the referendum. The number of people who would now opt to region the bloc has risen 11 percentage points since January 2021, when the UK officially ended the transition period and formally left the EU. Back then some 81% of those who had voted to leave said they would still vote to leave the EU, while 9% would have changed their vote.

Meanwhile, according to last week’s poll, 32% of respondents said that they would vote to remain out. This came as 70% regarded the government’s handling of Brexit badly. According to Bloomberg “the findings reflect growing disillusionment among British voters about Brexit, which triggered years of divisive debate in Parliament before the UK finally left the bloc.”

Related
Commentary

Find out how we have helped our clients meet their hedging requirements.

Ready to talk FX?

Get in touch today to see how FX strategy can drive commercial impact for your business.

Contact us