Let’s talk about the money

We may have cheered at the TV rather than gone on a celebratory shopping spree but the feelgood factor could still boost London

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p41 Nadine Broersen of Netherlands competes in the Women's Heptathlon Long Jump on Day 8 of the London 2012 Olympic Games at Olympic Stadium on August 4, 2012 in London, England.

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James Ashton

12 September 2012

So now we know where not to look for the economic boost from hosting the Olympics and Paralympics this summer. High street sales in August were distinctly underwhelming. There was a small boost to sales of party food, according to the latest British Retail Consortium data, but clothing, particularly womenswear, was disappointing, and footfall was down. Even the growth in internet sales slowed considerably.

There was similarly no golden glow for restaurants, which complained that the West End became a ghost town for those two weeks in August. Some pub chains say they did well in spite of the Games, not because of it.

But this isn’t the point. Let’s not forget there is a big difference between short- term trading and the long-term business benefits of hosting the Olympics. The economic legacy left behind is far harder to measure in millions or billions. It is also far too soon to say whether the opportunity has been a financial miss instead of the giant hit that politicians and business leaders were hoping for.

At the moment, we are still basking in the feelgood factor. How business harnesses that halo — in construction, tourism and inward investment — will determine whether there is a big payday to come further down the line.

David Cameron set out his stall weeks before the opening ceremony. Based on some nifty calculations by UK Trade & Investment, his export agency, stand by for a £13 billion boost. UKTI, which hosted a glitzy investment conference in St James’s the day before the opening ceremony, must be hoping the cheques roll in soon. Out of that figure, it has earmarked £1 billion from additional sales by British companies, up to £4 billion from so-called “high-value” opportunities, £6 billion in foreign direct investment, and £2 billion from the increased flow of foreign tourists.

What it is important to understand is that the £9 billion cost of staging the Games is seed capital to drum up interest in bosses who came to London to cheer on their country or gladhand behind the scenes. Thanks to a council tax hike and Lottery sales, it is bought and paid for.

More broadly, part of hosting the Games meant rebooting the impression of London in people’s minds.The Olympics was a moment in time for decision-making visitors to open their eyes a bit further. If we can debunk long-held ideas that we are old-fashioned and have lost our get-up-and-go, then all the better. Don’t underestimate the impact of a well-functioning Tube network and the legions of volunteers that lined every route when it comes to deciding where investment should be allocated down the line.

At Boris Johnson’s pre-Olympics reception to welcome the flame to City Hall, the chief executive of Coca-Cola, Muhtar Kent, harked back to his days as a student at Cass Business School to confirm his affection for London. Maybe the Games succeeded in giving him some more up-to-date memories.

Even before a starting gun was sounded, the Olympics proved a boon to our construction industry. Not just by providing contracts and jobs, but by laying to rest the ghost of failed infrastructure projects past. Costly problems with the Millennium Dome and Wembley Stadium feel like ancient history now. So too does the debacle of Picketts Lock, the scrapped national athletics stadium that meant London couldn’t host the 2005 World Athletics Championships.

We have regained a reputation for staging large events. In addition, the designers and contractors who helped to prepare the Games venues have been in demand from Sochi and Rio, hosts of the next winter and summer Games. On top of that, visitors caught a glimpse of the best our education, technology and creative industries have to offer.

With a bit of help, particularly on simplifying visas, tourism could boom too. The Olympics painted a picture postcard image of the capital. The arts and heritage fans who gave Britain a wide berth this year should be back in increased numbers in future because of what they saw on TV.

All in all, totting up the profit — or loss — from London’s great sporting summer is impossible in the short term. But the hard work should be going on behind the scenes right now to ensure our economy makes the most of it for years to come.

In association with Cisco, Official Network Infrastructure Supporter for London 2012

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