When the Olympics, or even the World Cup for that matter, are awarded to a country there is always an initial flurry of reports about how much a country will benefit from being host – that’s after the doom mongers have told us how much it is going to cost each of us.
And now, with just three weeks to go until the London Olympics open, the costs and benefits are once again being reviewed. One particularly positive headline I saw earlier this week came from Lloyd’s Banking Group. They claim that the London Olympics will help create more than 62,000 jobs and boost the economy by £16.5 billion. I bet that cheered the Chancellor up while he scanned the news over breakfast.
Lloyd’s estimates actually cover a period of 12 years – 2005 to 2017 – and say that two-thirds of the benefits will have already been seen. Indeed, with tourism and construction the main sector beneficiaries, it is fair to deduce that construction has already had all the benefit it will get from the games, while the tourism sector is waiting with bated breath for 5 million people to start arriving in 20 days time. Oh yes, and there’s the extra ticket sales on trains, tubes and buses as well.
The remaining third, Lloyd’s claim, will be in the five years after the games when the Olympic sites are developed for tourism. But the momentum and commitment to make sure this happens is crucial. As Fen Sung, manager of the Premier China Enterprise fund, pointed out to me recently:
“At the time of the China Olympics, tourism and construction were working well but the benefit was very short-lived. A lot of money was spent, but the Bird’s Nest Stadium – the focal point of the games – is not being used today.”
Whether the London Olympics is viewed as a success or not, and whether we see a short-term lift in markets as a result, will really depend on whether the majority get caught up in the euphoria of the event or bogged down following twitter stories and the like moaning about public transport and the weather as we are prone to do. As Kim Stephenson the financial psychologist points out:
"In the end, it is the majority view that will prevail, because people will eventually back their beliefs with their buying and selling behaviour, and the markets will move in line with that, pretty much irrespective of what the “facts” are."
Unfortunately, at the moment, any positive impact of the Olympics on the UK markets pales into insignificance alongside the ongoing issues in the eurozone. Still, hopefully team GB will do well and make us proud and, who knows, perhaps the world’s leaders (who are bound to get some decent seats without having to spend hours online applying for tickets) will feel inspired enough to find a decent way out of the mess we find ourselves in.This article was written by Darius McDermott and originally published on Mindful Money under the title: Will the London Olympics be a success for the UK economy?
Tags: contruction , job creation , jobs , Lloyds Banking Group , London2012 , market , olympics , tourism