The economic impact of the Olympics is the subject of much debate here in the UK, especially with the cost of hosting the games exceeding 9 billion pounds at a time of economic recession.
The government says this is an historic opportunity to attract investment and boost tourism with the Prime Minister David Cameron expecting revenue of 13bn pounds over 4 years - the minister in charge told Al Arabiya the games would generate at least one billion pounds for British business.
“The Olympics is costing a lot of money but it’s very much worth it. We know that for every pound spent on UKTI’s activity generates 19 pounds for British exporting and investment. What that would lead to we hope is a billion pounds worth of benefit British economy as a result of the games time activity,” said Sir Alan Collins, Managing Director of Olympics Legacy at UK Trade & Industry Ministry.
Analysts expect the games to give GDP figures for the third quarter a small boost with the increase in visitor numbers, revenue from ticket sales and contracts awarded to British companies to provide Olympics infrastructure and services.
But most experts agree any benefits will be temporary and not enough to lift the country out of recession.
“The short term benefits potentially are bigger than the long term effect. Hopefully we will still have the effect few years down the line. I think people are forecasting potentially an extra 0.3 percent on quarterly GDP. Its quiet interesting to look back, if you look at Sydney in the year 2000, Athens in 2004, and Beijing, the Chinese Olympics. They (China) yet to recoup, according to them anyway the cost of the Olympics, but it does raise an interesting question. Should it all be just about profit?” said David Jones, Financial Analyst at IG Index.
The short term boost is potentially going to be bigger than the long term effect, hopefully we’ll still have the effect a few yeard down the line, I think people are forecasting potentially an extra 0.3% on quarterly GDP , it is quite interesting to look back if you look at Sydney in the year 2000 Athens in 2004 and Beijing for the Chinese Olympics, they’ve yet to recoup, according to them, the cost of the Olympics, but it does raise the question, should it be just about profit?
Some also question the high cost of staging the games at a time of economic austerity when the government is cutting costs and trying to reduce the budget deficit.
And many Londonders fear the travel disruption on the city’s already stretched transport network of underground trains, buses and roads, which will make it difficult to get to work, with some opting to work from home instead.
Still, some say the games could generate a sense of national pride, which is a positive for the economy, but can’t be measured easily.