The false economy of the London 2012 Olympics
Since London’s Olympic bid was accepted in 2005, economists worldwide have been debating how this momentous event will affect the UK’s economy. Following the 2008 global recession, more still have been speculating on its impact.
The general consensus has been that in the years running up to the competition, the British economy has been bolstered by activity in and around the Olympic Village. House prices in Stratford and the surrounding areas have seen a significant increase (in some cases they have increased by 10 per cent), and almost 40,000 jobs have been created as a direct result of the Games. Stratford City itself has seen a major revamp, with the construction of the new Westfield, the largest shopping centre in Europe, constantly drawing trade from tourists and locals alike. This new supermall has proved so popular in fact, that it saw 160,000 customers on the first day alone.
Now that the event draws ever closer, and the Olympic hype reaches new heights, what effect will the 2012 Games really have on the UK’s economy? One thing is for certain; in the midst of the Eurozone crisis, many people are wondering, and hoping, that London 2012 will be enough to bring England out of its current slump for good.
We feel that between July and September this year, Britain’s economy will indeed be boosted. However, whether this becomes a lasting legacy depends entirely on what happens to places like the Olympic village after the Games, and the tourists, have gone.
Tens of millions of visitors are set to arrive in the UK this summer, injecting billions of pounds into the UK economy. Hotels, restaurants, bars and pubs are all preparing for the staggering increase in trade, and for the first time in months Britain’s high street and retail sectors look set to make sizeable profits.
When England failed to qualify for the Euro 2008 Championships, it has been estimated that it cost the economy £1.5 billion in lost trade and commerce. This is despite the fact the tournament wasn’t going to be held on British soil.
With this sudden influx of new custom, the Square Mile, arguably Europe’s most important financial quarter, should also reap the benefits. High Street stock is likely to increase significantly, and any savvy trader is sure to make a good return.
Having said that, this boom is not a sustainable phenomenon. When the crowds leave, so too will the profits, and unfortunately, the two months of economic growth that we’ll witness is unlikely to be significant enough to lift us out of recession in the long term.
What will have a lasting impact is the way in which the amenities such as the Olympic Village are utilised after the Games. The London Organising Committee for the Olympic Games and Paralympic Games (LOCOG) have plans to convert the Olympic Village into 3,600 new apartments and homes for the local community. In an area which is currently underdeveloped, this may well prove to be the regeneration needed to attract workers and businesses to the region. However, whether this will be enough to impact the rest of the UK’s economy is something that remains to be seen.Tagged in: economy, olympics, recession, stratford westfield
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