UK economy set to benefit from £16.5 billion ‘Olympic Effect’

The UK economy is set to benefit from £16.5 billion of GDP, as a direct result of the London 2012 Olympic and Paralympic Games and its legacy, according to a new study from Lloyds Banking Group.

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London 2012 is the most important sporting event the UK has ever staged. However it is also impacting our economy in a way that cannot be ignored.

London, UK (PRWEB UK) 10 July 2012

The report, The Economic Impact of the London 2012 Olympic & Paralympic Games, examines the overall impact that the Games is likely to have on the UK’s economy, taking in the period from London’s successful bid in 2005, through until 2017 – a five year legacy period. It demonstrates that the event is driving activity across the key sectors of construction and tourism, leading to jobs, expenditure and opportunities for businesses across the UK – in both the short and long term - and it shows that SMEs are contributing more than half (52 percent) of the overall increase.

Patrick Foley, chief economist, Lloyds Banking Group, said: “London 2012 is the most important sporting event the UK has ever staged. However it is also impacting our economy in a way that cannot be ignored. We’ve witnessed a construction project on an unprecedented scale, the economic ripples of which are being felt not only in the Host City, but across the UK.

“As this study demonstrates, London 2012 will help support employment, tourism, consumer spending and living standards, not only this year, but for many years to come. And it could not have come at a better time, given the tough conditions in the UK economy.”

Overall economic impact
Most of the GDP effect linked to the Games (57 percent) stems from construction projects occurring before 2012, including the building of the Olympic Park and the development of other sites and venues across the UK. Games-related tourism across the UK during London 2012 and over the first five legacy years is expected to deliver 12 percent of the GDP contribution, while spending on the staging of the event itself is expected to contribute six percent. The remainder of the impact, 24 percent, is due to legacy construction activity.

The study also shows that the Games will also help support and create the equivalent of more than 62,200 jobs in London and across the UK.

Although most (70 percent) of the total GDP impact expected from London 2012 will come from the period in the run up to and including the Games, the five year ‘legacy’ period could generate as much as £5 billion – nearly a third (30 percent) of the total economic effect expected from the event.

The economic impact is spread across the UK, with London delivering £6 billion of the overall contribution and other parts of the UK responsible for the remaining £10.5 billion.

Key sector impacts
The key sectors of construction and tourism are expected to provide the largest contribution to GDP:

Construction
o    Games related construction activity will have contributed £13.5 billion to GDP by 2017.
o    Of this, £4.5 billion will come from pre- and post-Games construction work, while £5.8 billion will be delivered by firms providing supplies to London 2012 construction companies. A further £3.3 billion is expected from spending by construction workers and employees within the supply chain.
o    The 800 construction related contracts awarded to UK suppliers by the ODA, have been spread across the regions. With 25% going to suppliers based in London and 75% to firms in the rest of the UK.
o    The GDP impact from construction comes from the preparation of the Olympic Park site (£2.3 billion) and building of the main venues (£1.3 billion), while conversion of the Athlete’s village into housing and building of retail space in the Park after the Games will also contribute around £4 billion.
o    A total of 267,000 jobs are expected to be created and supported as a result of London 2012 construction. Approximately 70 percent of employment from Games-related construction will come in the run up to and during the Games, while the remainder will come in the legacy years.
o    Critically, 59 percent of the anticipated construction related GDP will occur outside the capital, as a result of construction firms' purchases from their supply chain and spending by their own employees.

Tourism
o    By the end of 2017, London 2012 related tourism – where visitors come to London as a result of its status as an Olympic City - is expected to have generated £2 billion in GDP, across England, Scotland and Wales. Three percent of this GDP impact will be generated in the period before the Games; just less than half (49 percent) during; and a similar amount (48 percent) in the five legacy years.
o    A total of 10 million people are expected to visit the Games competitions, with approximately 1.2 million (12 percent) of these coming from overseas.
o    The net effect on UK tourism over the entire period covered by the report (2005-2017) is that there will be an estimated 10.8 million additional visits, including 400,000 pre-Games business trips and over 1.6 million visitors after 2012, as part of the Olympics' legacy effect.
o    An increase in regional tourism is expected as Londoners and other UK residents look to avoid the Host City before - and particularly during the Games - and as a consequence of foreign tourists visiting other parts of the UK during their stay.
o    Hotels and restaurants will experience the biggest impact – they will feel 22 percent of the anticipated tourism-related GDP impact, while retail and transport will provide 10 percent and 16 percent, respectively.
o    Tourism attributable to London 2012 is expected to support or create more than 31,000 jobs across the UK in 2012 – 5,700 in London and 25,300 elsewhere - in particular in the North West, South West, South East, Scotland and Wales.

To download the full report, please visit: http://www.lloydsbankwholesale.com/London-2012/economic-impact-report
Notes to editors:

o    The Economic Impact of the London 2012 Olympic & Paralympic Games, was produced by Oxford Economics, on behalf of Lloyds Banking Group, June 2012.


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