Ever since London was successful in its Olympic bid in 2005 there has been a considerable debate regarding the effect of the Olympics on the London Economy. Initially all forecasts were very bullish, and economists from all over the world foresaw many new opportunities for business and businesses in London.
As it turned out their initial speculations had been considerably over-optimistic. The one thing that the early protagonists of economic opportunities failed to take account of, or even to consider that it could be a possibility, was the global recession that descended in 2008. Perhaps it was not quite a game stopper, but it certainly was a game changer.
That the economy of London has benefited is undeniable, and particularly in the area of the Olympic Village. A huge number of jobs have been created, and current estimates put this figure at 40,000 new jobs and many more jobs have been sustained. House prices in Stratford, the location of the Olympic Village, have risen by as much as 10 percent which even for London is a very high and Stratford itself has benefitted from major reconstructions and renovations including Westfield Stratford City which is now one of the largest shopping centres in the whole of Europe and which opened in 2011 with 175,000 square meters of retail space which saw 160,000 individual sales on its very first day.
The question that many are pondering as the Olympic Games and the Paralympics draw closer is whether the economic benefits will be sufficiently sustainable to lift London and the rest of the UK above the current double dip recession doldrums and kick start a new period of economic growth. However, that really is a big ask, particularly considering the present crisis over the euro and concerns that Greece will finally exit the eurozone.
So what will happen? You don’t need a crystal ball to see that over the summer of 2011 there will be a considerable boost to both the economies of London and Great Britain as a whole. Visitors will arrive in their tens of millions by plane and by ICE and they will spend billions of pounds in London hotels, bars, restaurants, pubs, retail outlets, entertainments centres. London transport which will sell travelcard London by the millions, and many other businesses are readying themselves for unprecedented levels of trade.
There will be some quick profits to be made in the city and by local businesses but it is far from clear what the impact of this will be once the athletes and spectators have returned to their homes, though it is unlikely to be sufficient to rekindle sustainable growth. No doubt an important factor will be the future of the Olympic Village (and other venues that form the basic infrastructure of the Games). Plans are afoot to convert it into 3,600 new homes that will help the local community and no doubt this will create new jobs and attract new investment and businesses, but will it be sufficient? It is unlikely but only time will tell.
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