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The recession has wiped £3 billion off the value of the Olympic economic “dividend”, a study claims today.
The 2012 Games will now boost Britain's GDP by only £6 billion rather than the £9 billion first estimated, according to research from City analysts Capital Economics.
In a downbeat assessment of the nonsporting value of the Games, economist Samuel Tombs said: “In light of what we now know, we estimate that the net overall boost to the UK economy could be more like £6 billion, largely as a result of smaller legacy and investment effects than we had estimated.
“At its peak, the Games might boost GDP by only 0.1 per cent in 2012. And in the years before and after the Games, the boost will be negligible.”
The research — published on the eve of the “1,000 days to go” milestone — will come as a setback for government hopes of a rapid economic recovery, partly fuelled by the Olympic build-up.
The main reason for the downgrade is lower private investment than forecasted in July 2005 when London won the Games.
The credit crunch has made private sector funding of infrastructure such as the Olympic village and the media centre impossible, forcing the Government to intervene with extra cash from the £9.3 billion budget.
Mr Tombs said that about 75 per cent of Games investment will have to be funded by local and central government, money that will have to be recouped through spending cuts elsewhere or tax increases.
The £6 billion is made up of a net investment boost of £1.2 billion spread over five years — equal to 0.01 per cent of GDP a year; a £1.5 billion net spending by visitors during the Games; £250 million of extra revenue from higher levels of tourism during the Games; and a £3 billion legacy effect from employment and tourism in the years up to 2017.
Mr Tombs put net job creation at about 25,000 compared with the 50,000 estimated by the London Development Agency.
This meant that, “while the Games will undoubtedly be a great sporting event, we doubt that they will win any gold medals for the economy”.
Portraits of 2012 stars on show
A photo record of the people behind the 2012 Olympic Games is unveiled today — 1,000 days before the opening ceremony.
The first portraits in the series are at the National Portrait Gallery for the next week. They include 2012 ambassadors and Olympic champions Denise Lewis and Jonathan Edwards.
The three-year commission is also chronicling organisers and workmen from Sir Keith Mills, deputy chairman of the organising committee Locog, to Mike Dobriskey, a soil consultant at the Olympic Park — pictured with his daughter, 1,500m British medal hopeful Lisa.
National Portrait Gallery director Sandy Nairne said: “It focuses on inspirational figures who have brought the Games here.”
The Road to 2012 Project is among Games events this weekend including fireworks at the BT Tower and Corgi London bus replicas going on sale at Hamleys.
Reader views (1)
The recession is no comparison to the totally unreasonable financial withdrawls for both the LOCOG and ODA financial pots that are being made by Sb Coe, Paul Deighton, Charles Allen, John Armitt, David Higgins, Andrew Dunlop, Robert Aitkin, Alisonm Nimmo, Jacky Brook-Doyle, Nicky Hughes, & David Taylor plus then the Bonuses - Why Bonuses when they have like the rest of us to do a job. What criteria do they have to achieve to gain a bonus how dare the government allow such payments.
- Clare, cardiff
