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Taylor Swift, an American singer-songwriter, is in the midst of her spotlighted Eras tour. The tour spans across six continents, with the UK hosting 15 concerts in cities such as London, Liverpool, Cardiff, and Edinburgh. New data from Barclays reports predictions of spending close to £1 billion in the UK as a result of Taylor Swift’s tour. Barclays break down the total spending by claiming that each attendee will spend an average of £848 per person to attend the Eras tour, including travel, accommodation, and merchandise (Barclays, 2024).
The economic impact of such a large injection into the UK economy can be explored with the circular flow of income.
Check out this video for an explanation of the concept of the circular flow of income:
The large amount of spending to witness Taylor Swift perform adds a large sum of money into the economy. The circular flow of income model suggests that new spending on goods and services like tickets, travel, and hotels, generates new income, in turn creating further rounds of spending. The expenditure and consumption of Taylor Swift fans is converted to income for businesses that are operating in these sectors. An example of this would be restaurants surrounding the concert venues observing increased revenue when tour dates are happening. This increased revenue for businesses means more staff members may be working during busier times, or even more staff members may be hired. Employees who receive wages for their labour at these businesses re-spend their own income in the economy. This further spending supports additional economic activity in the UK. Ultimately, this narrative links to the concept of the multiplier effect.
The fiscal multiplier effect happens when there is an initial injection into the circular flow of income, which causes a larger final increase in national income in the economy. The size of this multiplier effect depends upon whether there are any leakages, such as money leaving the UK economy through savings, taxes or imports. In the case of the Eras tour, this may be Taylor Swift merchandise that is produced abroad, not in the UK. We can illustrate the multiplier effect caused by Taylor Swift on an aggregate demand / aggregate supply diagram, as the video below explains. The initial injection into the economy is reflected by an increase in aggregate demand, since consumption is increasing, and consumption is a component of aggregate demand. This leads to a rise in output. The further rounds of spending trigger further increases in aggregate demand and therefore raise output even more.
Check out this video for an explanation of the concept of the multiplier effect:
Looking through an interdisciplinary lens, the geographical impact of Taylor Swift’s tour is essential in analysing the predicted £1 billion boost in UK spending. Due to the nature of how the tour works, with dates held in a limited number of large cities, the tour may stimulate economic activity only in certain regions and local economies. With fans travelling to one of the host cities, such as London, Liverpool, Cardiff, and Edinburgh, this may be seen as reducing the spending in other parts of the country, causing an uneven distribution of the multiplier effect and the benefits it allows. There is an opportunity cost where Taylor Swift fans choosing to spend on average £848 per person to attend the tour means that this money is not spent elsewhere, in other sectors or perhaps on small, independent businesses. The term opportunity cost refers to the next best alternative sacrificed of foregone, for instance using the £848 to go on holiday or redecorate your house.
In essence, Taylor Swift’s tour to the UK uplifts the economy with large amounts of consumption, specifically in sectors such as travel, hospitality and retail. Economic concepts such as the circular flow of income, the multiplier effect, and opportunity costs help to explain the predicted £1 billion economic boost in spending.
If you are interested in gaining a deeper understating on the impacts of the Era's tour have a look at this article.
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