EURO 2024 Final, Paul the Octopus unmatched
Over the last few weeks, we've been having a bit of fun applying our NFA model (which measures a country’s net assets held abroad less liabilities owed to foreigners) to predict the EURO 2024 matches. With England facing Spain in the final on Sunday, it's time for a look back at our model's performance – and our prediction for the winner.
Early results were promising, with 10 out of 12 countries automatically qualifying for the round of 16 boasting NFA scores of 3 stars or better. Only Portugal and Spain seemed to defy the odds. We even managed a 63% success rate in the round of 16! But alas, the semi-finals proved our undoing, with a 100% failure rate.
You might think we are disappointed, but we're actually thrilled. Why? Because 4-star England defied our model's prediction and triumphed over 6-star Netherlands!
Although predicting the EUROs is just a light-hearted distraction, there is a serious side to NFA analysis. Last week we highlighted the similar debt levels of the UK and France (with debt-to-GDP ratios of 104% and 111% respectively) but noted that France's NFA position has markedly deteriorated in recent years. France only just scrapes in as a 3-star rated country, with net foreign liabilities of 48.8% of GDP. Deteriorating NFA positions are often associated with credit downgrades (and vice versa), so it is worth noting that both Moody's and S&P have flagged that France could be downgraded following the recent elections. S&P already downgraded France's rating at the end of May due to the country's deficit figures, and further downgrades may occur if growth is slower than previously predicted.
Back to the Football. Regardless of Sunday's outcome, we cannot quite compete with the legendary Paul the Octopus. His keepers at Germany's Sea Life Centre presented him with two boxes representing each team, and his food choice determined his prediction. With an astonishing 85.7% accuracy, Paul's legacy is unmatched. Sadly, Paul passed away at the tender age of two, so we can't ask for his expert opinion for the final.
We will have to rely on our NFA model instead. Now, here's the worry: our model predicts an England victory in the final against Spain. So, fingers crossed our NFA gets it right this time!
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