Morton Solutions Look At How The Olympics Will Impact The Economy

Jan. 30, 2012 - PRLog -- Hosting the Olympic games has a positive impact on a country's economy, giving a powerful boost to exports, according to academic research. With the London Olympics now just a matter of months away, the current economic downturn has placed the issue in even greater focus, as pressure on government spending, and jobs, intensifies. Will it boost GDP, lower it, or have no impact?
The government announced in January 2009 that more than 30,000 new jobs will be created between 2009 and 2012 and in a recent interview a spokesperson from Morton Solutions said, “The games come at a time when – because of public spending cuts and extensive media coverage – the mood of the nation and the confidence in the economy is at a real low. It would be great if the Olympics can bring in revenue, and undoubtedly it will, but given how much the bid and hosting the games will cost in terms of public funding, there will be an uproar should it fail to deliver, especially given the backdrop of cuts in social spending.”
According to one economist’s predictions, the London 2012 Olympics will be marred by protests, transport issues and price gouging.  The official forecast from the Office of Budget Responsibility is that the UK economy will grow by 0.7pc in 2012. The Olympics are guaranteed to contribute 0.1pc through ticket sales but beyond that the OBR only says: "Taking our assessment of both underlying growth momentum and the various temporary influences on GDP into account, we expect to see little measured GDP growth in the first half of the year but a stronger performance in the second."

A 2011 study said that consumer spending will soar by £750m during London's Olympic Games and also forecast a sustained boost to the British economy of a total £5.1bn over the next four years.
The detailed breakdown suggests that high street retailers which have taken the brunt of the recession will be the major beneficiaries, set to receive an extra £185m. The ailing hotel sector will get a £123m spending uplift, the entertainment and food and drink industry £81.5m and airlines, car hire and other travel sectors £40m. And supermarkets are set to see a £80m boost in spending.
Visa Europe's report said: "This is a first for an Olympic Games host market, which usually experience a domestic spending slump during the Games. This will be driven by the public's enthusiasm for the Games, demonstrated by the high demand for Olympic tickets. British residents are likely to switch from traditional patterns of summer spending to getting into the Olympic spirit by stocking up on supplies and entertaining at home. Supermarkets will be particular beneficiaries of this."
Marc O'Brien, managing director of Visa UK, said: "As the report shows, the UK will benefit from an immediate positive economic impact as a result of a large increase in consumer spending during the Olympic and Paralympic Games. Much like the World Cup, British consumers are expected to boost supermarket sales by £80m as Britain lives up to its reputation as a nation of sport lovers, meaning that for the first time domestic spend is forecast to grow during a Games, previously unheard of for a host market."
He said this in turn would lead to a huge "ripple" effect: "Economic output will increase and the benefits will be felt in people's pockets as incomes increase. This immediate positive economic boost will translate into sustained economic stimulus and job creation, impacts which will be felt long after the Games have finished."
The mayor of London, Boris Johnson, said: "I am determined that hosting the Games will transform the wider job prospects and economic future for Londoners."
Quite how the nation at large will feel about the games and whether it will be enough to revive an ailing economy remains to be seen.

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