Olympics provided gold for Team GB, but not the economy

September 13, 2012

Britain’s Olympic and Paralympic teams may have brought home more medals than organisers had dreamed possible but the Games themselves have probably failed to lift the economy as much as the government had hoped.

The country’s gross domestic product will grow 0.6 percent in the current quarter, according to the latest Reuters poll, revised down from a 0.7 percent prediction in an August poll.

That is enough to drag Britain out of its second recession in four years but most of the bounceback is from an extra working day and better weather in the quarter.

 

“The Olympics’ actual effect will only be small,” said James Knightley at ING Financial Markets.

Before the sporting extravaganza kicked off, Britain’s government touted the Olympics as a historic opportunity to showcase UK business and tourism.

Prime Minister David Cameron suggested the Games would generate 13 billion pounds over four years, on a roughly 9 billion pound cost.

Many businesses had hoped the Olympics would lift consumers’ spirits and boost business but a key business survey provided mixed evidence.

Some companies participating in Markit’s Purchasing Managers’ Index reported a positive impact on activity.

Others said the Olympics had impaired growth either due to travel restrictions in and around London or through business being put on hold during the period of the Games.

The Games also failed to boost British retail sales as hoped during August, when households preferred to watch the games rather than go shopping, giving stores one of their worst months of 2012, the British Retail Consortium said last week.

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