Olympics legacy: Did London 2012 provide a boom - or leave us bust?

We were told that London 2012 would boost business and revive the UK economy. Has it? James Ashton continues our week-long special investigation of the Olympic legacy

Some 36 hours before Daniel Craig collected the Queen for their helicopter ride over London one Friday evening last July, a phalanx of dignitaries took a far lower-key trip to another London landmark. The polished limousines that discreetly rolled up to Grade 1-listed Lancaster House at the base of St James’s disgorged chief executives, central bankers and heads of state. They  were in the capital to enjoy the spectacle of the start of the London Olympics. But first, on a bright summer’s morning with the national anthem wafting on the breeze, they were being encouraged to get down to business.

This gathering, the Government’s main investment pitch to the world, typified what was going on behind the scenes last summer while most eyes were focused on events in the pool and on the track. The Business Olympics, featuring a networking marathon and a 100m dash to the canapés, was designed to squeeze some lasting economic benefit from the greatest show on earth. One year on, how much has London, and Britain, profited?

Business leaders agree that the event was, if nothing else, a great advert for Britain. “It is often thought that we aren’t very good at running things but the precision and quality of presentation of the Games, the way it was managed with what people recognise as a challenged transport system, and the way that projected around the world, was fantastic,” said Andy Cosslett, who once ran InterContinental Hotels Group and is now in charge at gyms chain Fitness First.

Translating that mood into pounds and pence is harder. The country needs to reap more than £9bn – billed as the cost of staging the Games – to push the whole effort into the black. Pragmatically, totting up the gains barely 12 months on is too soon.

Sure, the value of booked-up hotel rooms, temporary employment and, conversely, deserted West End restaurants, has already been calculated. But the real boon, as seen by the agenda that morning at Lancaster House, was in the long-term impact that holding the Olympics could have on tourism and trade. David Cameron couldn’t have made that any clearer.

“My message today is very simple,” the Prime Minister told delegates. “Britain is back, open for business, and we are committed to supporting global growth with open trade between our nations.”

Ministers wanted to emphasise the traditional and the modern, which was why guests – including Alexandre Tombini, the governor of Brazil’s central bank, and GlaxoSmithKline drugs boss Sir Andrew Witty – were greeted in a room with a 200-year-old John Nash staircase and featuring two of Thomas Heatherwick’s extruded aluminium benches.

As WPP advertising chief Sir Martin Sorrell pointed out, Britain is harder to market to international investors than the emerging superpowers of China and Brazil. Everyone has an ingrained view of what our country and London can offer them, but they aren’t always right. Pitching its strengths that day was designed to boost trade.

Doubters said setting targets for the economic impact of the Olympics would be meaningless – but it didn’t stop the government from trying. The most many host cities can hope for is to avoid bankruptcy. Yet a hoped-for benefit of £13bn over four years was announced by Cameron in the run-up to the Games. It included £6bn from foreign direct investment, £5bn from extra sales and contract wins by British companies, with the balance from an increase in tourists.

Lord Green, the Trade and Investment minister, who is due to give a progress report, said: “We set ourselves an internal target of £5.3bn in the first year and I am confident we will meet it. That includes a £2.5bn boost in foreign investment over the past year, bringing more than 31,000 jobs.

“While, of course, the London 2012 ‘halo’ will fade over time, we are already winning significant new business overseas and there is a large pipeline of future business projects going forward which we are well placed to do well in.”

It wasn’t all immediately positive. For the tourist industry, there is evidence the Games depressed growth in visitor numbers last year, as non-sports fans stayed away. In a stagnant European market, only London and Paris are thriving. Hotel bosses assign very little importance to the Games reinforcing the capital’s attractions.

“I’m not sure that a market like London is really going to benefit longer term from the Olympics,” said Arne Sorenson, boss of Marriott International, whose brands include Ritz-Carlton and Renaissance. “It is such a compelling destination anyway – and it was before.”

But there are plenty of examples of businesses that have benefited. David Pegler, chief executive of ExCeL London, the exhibition centre that hosted seven Olympic events including boxing, fencing and weightlifting, reports a threefold increase in the number of large events it has been asked to pitch for.

“That is definitely the result of much greater interest in London, people almost rediscovering the city because of the Games and the fact they were an almost flawless event,” he said. “That is very tangible.”

Yet direct gains are hard to separate from the recovery that London’s economy has seen over the past year. Experts doubt it has had much impact on the resurgent commercial property and housing market, for example. All that Chinese and Abu Dhabi money would have flowed here anyway. 

“Does it help London being showcased and planning a very positive event – and doing it very well?” asked Jeremy Helsby, chief executive of property group Savills. “It can only help the feel-good factor. But if we hadn’t had the Olympics would London property prices still be doing what they have been doing? Absolutely, yes. They are intangible benefits rather than tangible.”

Cheerleaders prefer to point to the work that was done to prepare London for the Games and turn a derelict strip of land into an extension of the capital.

The futuristic stadia greenlit by the Olympic Delivery Authority’s design chief, Alison Nimmo, who now runs the Crown Estate, helped to show off British engineering skills, which are in demand, particularly in Qatar, which is preparing to host the 2022 World Cup.

Business leaders involved in the Olympics such as Sir Charles Allen, the former ITV boss, estimate that the overhaul of Stratford in East London advanced 20 years of regeneration, making the Games a one-off excuse to do something large and lasting.

“Only the government could do something on that scale,” said Sir John Ritblat, the property veteran who is chairman of the advisory board of  Delancey, which acquired the athletes’ village in partnership with Qatari investors. Now the site is known as East Village and 3,000 new homes are on offer with the promise of more to come.

It all adds up to a lingering feel-good factor, which the Government’s export body UKTI is doing its best to capitalise on abroad. The economy will benefit, but counting up all of that Olympic gold is far from a straightforward exercise.

A Russian hunter at the Medved bear-hunting lodge in Siberia
Save the tigerWildlife charities turn to those who kill animals to help save them
Davis says: 'My career has been about filling a niche - there were fewer short actors and fewer roles – but now I'm being offered all kinds of things'
PeopleWarwick Davis on Ricky Gervais, Harry Potter and his perfect role
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Arts and Entertainment
A scene from Aladdin is performed at the Tony Awards in New York in June
theatreBrit producer Lythgoe makes kids' musical comedy a Los Angeles hit
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
Life and Style
A small bag of the drug Ecstasy
Life and Style
Floral-print swim shorts, £26, by Topman, topman.com; sunglasses, £215, by Paul Smith, mpaulsmith.co.uk
FashionBag yourself the perfect pair
Netherlands' goalkeeper Tim Krul fails to make a save from Costa Rica's midfielder Celso Borges during a penalty shoot-out in the quarter-final between Netherlands and Costa Rica during the 2014 FIFA World Cup
newsGoalkeepers suffer from 'gambler’s fallacy' during shoot-outs
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmReview: A week late, Secret Cinema arrives as interactive screening goes Back to the Future
Caption competition
Caption competition
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Daily Quiz
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

Save the Tiger: Meet the hunters tasked with protecting Russia's rare Amur tiger

Hunters protect Russia's rare Amur tiger

In an unusual move, wildlife charities have enlisted those who kill animals to help save them. Oliver Poole travels to Siberia to investigate
Transfers: How has your club fared in summer sales?

How has your club fared in summer sales?

Who have bagged the bargain buys and who have landed the giant turkeys
Warwick Davis: The British actor on Ricky Gervais, how the Harry Potter set became his office, and why he'd like to play a spy

'I'm a realist; I know how hard this business is'

Warwick Davis on Ricky Gervais, Harry Potter and his perfect role
The best swim shorts for men: Bag yourself the perfect pair and make a splash this summer

The best swim shorts for men

Bag yourself the perfect pair and make a splash this summer
Has Ukip’s Glastonbury branch really been possessed by the devil?

Has Ukip’s Glastonbury branch really been possessed by the devil?

Meet the couple blamed for bringing Lucifer into local politics
Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup