LONDON (Reuters) - London’s 2012 Olympic Games will bring no meaningful long-term benefit to Britain’s beleaguered economy, but they might give it a brief shot in the arm, according to a firm majority of economists polled by Reuters.
With two weeks to go until the opening ceremony, 23 out of 27 economists polled this week thought the UK’s first Olympics in 64 years would not provide a lasting economic windfall.
Britain’s government has touted the Olympics as a historic opportunity to showcase UK business and tourism. Prime Minister David Cameron last week suggested the Games would generate 13 billion pounds ($20 billion) over four years, on a roughly 9 billion pound cost.
Still, most economists from banks and research institutions thought that sounded optimistic, even if the Games give Britain’s moribund economy a kick-start in the third quarter.
“The UK economy is maybe the seventh largest, and when you stage an Olympic Games in an economy like that, it’s very difficult to identify what the impact is,” said Stephen Lewis, chief economist at Monument Securities in London.
He said the Olympics might give smaller economies an appreciable boost, but given London is already one of the world’s top tourist destinations, lasting economic benefits would be inconsequential.
“Where there have been long-term boosts to tourism, it’s generally been in cities that have previously not had as developed a tourist trade.”
But the brief influx of visitors, ticket revenues and the huge number of Olympic contracts for businesses might be enough to ensure Britain ekes out modest economic growth this quarter.
Nineteen out of 30 economists thought the Olympics would bring a significant short-term fillip for the economy, pegged at an extra 0.3 percentage points of gross domestic product this quarter. Britain fell into its second recession in four years around the turn of the year.
Olympic organizers are keen to stress London 2012’s impact across the whole country, with soccer, cycling and watersport events taking place across Scotland, England and Wales.
Scores of businesses based outside London have been awarded contracts associated with the Olympics, worth hundreds of millions of pounds.
Still, 26 out of 28 economists thought the Games would benefit mainly London rather than the whole of Britain, in keeping with a BBC poll on Friday, which showed 74 percent of Britons thought the rest of the UK would not benefit.
Games organizers have come under criticism in Britain for iron-fisted sponsorship rules that prevent businesses associating themselves with the Olympics unless they are an official sponsor, leading to fears small firms will lose out.
A large military presence in the city and worries about the transport infrastructure have also left some Londoners apprehensive about the Games, but there is a palpable sense of anticipation about the sporting events themselves.
Philip Rush, economist from Nomura in London, pointed out the Olympics can generate things like national pride that could affect the economy in ways that can’t be foreseen easily, nor simply plugged into a spreadsheet.
“Such speculation lies outside the core realm of economics,” he said.
“Within our field, we merely recognize that there is probably a net negative total economic cost from the Olympics, although it will serve to inflate activity in the third quarter.”
Economists are not known for their sporting expertise.
In previous polls on major sporting events like the soccer World Cup, they showed similar acumen in forecasting winners as they did in predicting the Great Recession in 2008 - very little.
Asked which athlete they thought would make the biggest impact at the Games this year, unsurprisingly most plumped for Jamaican sprinter Usain Bolt, possibly the world’s most famous athlete.
Editing by Ross Finley and Toby Chopra