Ben Chu: GB's gold haul will be restricted to the athletes

 

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Will the Olympics act as a defibrillator, jolting our flat-lining economy back to life? Don't count on it. Most analysts are not expecting much of an impact.

The state expenditure to build all those new sporting arenas has certainly been hefty, coming in at £6.8bn. But that money has been spent now. While Olympic construction probably helped to prop up the economy during the last recession the beneficial effect is now over. What of the additional spending throughout the Games themselves? There will be some. The actual running cost for the Games is expected to be about £3bn. And some private businesses in the capital will certainly get a boost, especially those hotels that have hiked their room prices. Yet there will also be severe disruption for other businesses.

Tourism is one of the other great hopes. Yet studies of previous Games suggest the Olympics tend to depress net summer visitor numbers.

So what are we left with? "In net economic terms they [the Games] will be a non-event" is the conclusion of the respected number crunchers at Capital Economics.

Of course the festival of sport might make people feel better. And – who knows – that feel-good factor could induce people to open their wallets and persuade business to invest. But again, past experience suggests that any boost to retail sales from large public events tends to be temporary and often largely reversed the following month.

Economic legacy? The organisers claim the fortunes of a depressed area of east London will be transformed. But again, the experience of previous Games is not particularly encouraging.

All in all, then, probably better to look for Olympic miracles from the performance of the world's elite athletes, rather than the British economy.

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