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.

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• Mark Swanepoel

  Beware of all major nomadic events. Often a few major multinationals drive these events & make much money at everyone else’s expense. It is unlikely South Africa will ever pay off most of the stadia constructed for the World Cup, despite a boost to tourism. The Cape Town stadium cost R4.4 billion, in a country where millions are homeless. A CT town planner I was dating at the time told me face-to-face that she was told to sign off development documents without considering objections as per the legal process, or face dismissal. The stadium could have been built near the Cape Flats, where local football fans abound. They are poor, and cannot afford transport to-and-from the Greenpoint Stadium. A sneaky contract was designed whereby CT City Council – & thereby municipal ratepayers – bear the capital cost of the stadium, but operating companies take the profits. Only companies rich enough to buy trading rights from FIFA could sell anything near the stadia. Poverty-stricken street vendors selling fast food around the stadia – as they would normally do – were removed at FIFA’s behest. Foreign companies bought the rights to make & sell FIFA-endorsed World Cup goods: almost all vuvuzelas & World Cup strips came from China, yet South Africans desperately need jobs. Worst of all, the South African Government colluded 100% with all this, & launched a campaign after the World Cup to con South Africans into believing that the World Cup was a great financial success. (Many swallowed it, hook, line & sinker.) Gov. officials were also brainwashed or bought off in various ways by FIFA & multinational companies. Yes, many temporary construction jobs were created – but nothing permanent except astronomical public debts. (Think twice, thrice, & yet again about HS2!) Anyone who examines historical Olympic projects will also find a whole lot of self-interested creepy-crawlies who were bought off. The Olympics should be permanently staged in Greece, where the event was born, and which is central to the world’s population, so reducing travel costs & emissions. THE OLYMPICS FOR GREECE, FOREVER.

• Mark Swanepoel

  See my comment above, & beware! If you live in London you should insist on finding out who will ultimately bear the capital costs, & how long they will take to repay.

• bobbellinhell

  I notice there is no allowance here for the catastrophic disruption to transport in London while KdF 2012 is going on. I don’t think London’s businesses are properly ready for the impact of having most of their staff stuck on trains during those two weeks.

• manwhosees

  ”House prices in Stratford and the surrounding areas have seen a significant increase (in some cases they have increased by 10 per cent)”………………………………………………………………….Well, only 10% increase? What a bitter disappointment !!

• Newsbot9

  Billions of damage will be done to normal business activity, and there are ongoing massive costs, such as the tube price rises, which have gone into cosmetics for the olympics.

  We shouldn’t be using state funding on any adult sports at the moment.