London’s Economy Will Benefit, in a Short Term

Report suggests that the knock-on effect of this increased consumer spending translates into widespread economic impacts across the board. A net ￡1.14 billion increase in economic output across all sectors is expected in order to meet demand caused by this spending injection.

This increase in economic output will also be felt in the pockets of UK residents, resulting in a potential ￡229 million net increase for UK resident’s incomes over the seven week period (as a result of increased wages, profits from rents for people renting out their homes and increased demand for output and services across all sectors).

Visa report predicts that this immediate economic boost will continue to have positive impacts after the Games have finished. The post-Olympic Games “halo effect”  is expected to increase economic output by ￡1.37 billion per year to 2015 – a total ￡5.1 billion stimulus for the UK economy including the impact of London 2012. That represents approximately 3.5 percent of the overall expected growth of the national economy over the 2013 – 2015 period. The impacts will continue to be felt by British residents too. Additional incomes to UK residents generated will be worth ￡296 million per year by 2015 and an average of 17,900 jobs per annum will be sustained across the UK economy.

Not all predictions are that optimistic. Recent study by Moody’s revealed that the economic boost won’t be lasting for long. The corporate sponsors will benefit from huge marketing opportunities, but it won’t provide sustainable economic improvement. Vice President of Moody’s Corporate Finance Group Richard Morawetz thinks that “the net impact of the Olympics on UK tourism will be positive overall, but far less than gross visitor numbers would suggests.”.While increased visitor numbers could boost sales of retail and consumer products, Moody’s expects that any longer-term benefits will be mainly from increased visibility of the brands, rather than actual sales.

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