Olympics boost for British economy short-term

2012-04-16 07:41

The London Olympics will give a short-term boost to Britain’s weak economy but experts predict the greatest sporting spectacle on Earth will fail to prevent a sharp slowdown this year.

The government has invested a total of R116 billion (11.2 billion euros) to stage the Games, more than four times the original estimate when London was named host city in 2005.

“The Olympics is unlikely to prevent the UK’s economic recovery from slowing again later this year as a result of further fiscal austerity, a weakening labour market and renewed recession in the eurozone,” said Samuel Tombs, an analyst at Capital Economics research group.

“Most of the Olympics’ boost to the economy has already been felt in the form of higher investment over the last five years,” he told AFP.

“Meanwhile, spending on tickets, travel and merchandise is likely to be offset by consumers cutting back on spending on other goods and services.”

Britain has spent billions of pounds of taxpayers’ money on building facilities such as the Olympic Stadium, an aquatics centre, velodrome and athletes’ village in east London.

The vast outlay comes as the country stands on the verge of recession as a result of ongoing state austerity measures and fallout from the stubborn sovereign debt crisis in the Eurozone.

British gross domestic product shrank 0.3% in the final three months of 2011 and another contraction in the first quarter of 2012 would place Britain back in recession, defined as two successive negative quarters.

Hilary Walsh, an analyst at the Euromonitor International consultancy in London, said the Games would have “a stimulating effect on London and the UK economy”.

“However, while the boost in tourism and consumer spending will be noticeable, it won’t be sufficient to lift us out of the current economic slowdown,” she said, warning: “It’s important to keep the Games in perspective.”

While she forecast that output would increase by 0.6% quarter-on-quarter between July and September 2012, the economic impact of playing host to one million visitors during the Games would not be sustained.

“The tourists will leave once the Games end and so too will the profits. The shot in the arm to infrastructure will be the main legacy of the Olympics and it will provide lasting returns for years to come for London, in particular the east of the capital,” she explained.

Around one million tickets for the July 27-August 12 Olympics were made available for overseas applicants, from a total of nine million.

“We hope the Olympics will inspire people to visit the UK for many years to come,” VisitBritain spokesman Mark Di Toro said.

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