No gold medal for British economy

The London Games did British atheletes proud but the British economy struggles to secure golden Olympics boost.

COMMENT

by Julien Mivielle

LONDON: With the London Olympics wrapped up yesterday, analysts said Britain’s recession-hit economy was unlikely to have won a major boost from the Games that have been a triumph for the nation’s athletes.

While Britain’s construction sector benefited hugely before the Olympics, experts have said the 17-day sporting spectacle had not delivered significant financial rewards and neither was it expected to in the months and years ahead.

Mary Rance, chief executive of tourism body UKinbound, said the Olympics which have cost British taxpayers £9.3 billion (US$14.5 billion) to stage have failed to lift her sector.

“From a positive perspective, the Olympics have been a catalyst for huge investment in infrastructure in London,” Rance told AFP.

But she added: “All the signs are that the Olympics have not delivered additional visitors to London and the UK. In fact, it is expected that numbers may well end up having fallen by well over 30%.”

Following claims in the first few days of the Games that they had turned London into a ghost town, British Prime Minister David Cameron urged people to “come back into the capital”.

And his words seem to have made an impact, with retailers across London’s main shopping district in and around Oxford Street reporting an increase in sales and a higher footfall in the days after Cameron’s remarks.

In the run-up to the Olympics, which began on July 27, commuters and tourists were warned to stay away amid fears that London’s transport system could not cope with millions of extra people descending on the capital.

The Games had long been heralded as a key boost to the British economy but industry body the European Tour Operators Association said tourist numbers had fallen “dramatically” in the first few days of the Games.

“Hotels have been cutting their prices and many shopping areas, restaurants, theatres, attractions and entertainment venues have seen a significant reduction in business,” added Rance.

“Although it must be said that shopping centres like Westfield Stratford City, next to the Olympic Park, have benefited significantly – and over recent days visitors seem to be returning to central London,” she added.

Very small boost

Businesses complained of being sidelined as tourists made a beeline for the Games and avoided the capital’s other attractions and shopping destinations, while non-sports fans opted to stay at home or delay their trips.

The Bank of England’s chief economist Spencer Dale last week said the Olympics would provide only “a small positive contribution” to the British economy.

“There may well be some extra spending from tourism, but as many of us know there has also been travel disruption, more people are going on holiday. So I think those effects are small.

“But the contribution from ticket sales and TV rights may lead to a very small boost to GDP in the third quarter.”

Britain’s Office for National Statistics has already said that Olympic tickets sold last year would be incorporated into gross domestic product figures for the third quarter, despite the bulk having been paid for last year.

Asked about the long-term benefits to the economy from the Olympics, Dale said: “Those type of effects are a lot harder to try and work out and I don’t think it will have a material impact in our projections.”

Analysts have said the Games could added 0.3 percentage points to British output in the third quarter, or July to September period.

Britain escaped a deep downturn in late 2009 but fell back into recession at the end of 2011. Latest official data showed GDP slumped 0.7% in the second quarter from the first three months of this year.

Meanwhile the nation’s coalition government, which has been hosting country leaders such as Russian President Vladimir Putin on the sidelines of the Olympics, said it hoped to strike trade deals during the event.

And it believes it can generate £13 billion of business, including almost half coming from foreign direct investment, over the next four years as a direct result of the Olympics.

But Slavena Nazarova, economist at French bank Credit Agricole, said the longer-term target was “a little exaggerated” given that Cameron had not included the greatest benefit thus far – the boost to the construction sector as a result of transforming a disused part of east London to host much of the Games.

-AFP