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Seeking an economic legacy for London 2012

The 2010 World Cup revived South Africa's image, Euro 2012 recently showcased Poland and Ukraine and the 2016 Games are expected to mark Brazil’s arrival as a major world player. ‘Mega events’ clearly offer benefits to developing economies, from improved infrastructure to consumer and tourist confidence, but what about the developed world? The gains are different - it’s about urban regeneration and redefining established cities in an increasingly competitive world market; the potential margin for positive change is significant but, arguably, smaller.

The 2004 Athens games exceeded its budget by five times and was seen by many as the harbinger of the country’s financial turmoil; the Summer 1976 Olympics in Montreal left the city in debt for thirty years. LA in 1984 generated a $335m profit, that continues to fund sports projects in California to this day, but it was a unique games (for which no other city bid) that was entirely reliant on existing infrastructure. The one million visitors to London this July and August, and the construction of the Olympic Park, will undoubtedly benefit the UK economy in the short term but determining the longer standing legacy of this summer’s games, poses a more difficult question.

The immediate effects are clear: 250,000 jobs, 11,000 new homes, improved transport links – including a cable car over the Thames, alongside a predicted £41m domestic and £700m tourist consumer spend. Various reports have been published recently that look at the effects of previous ‘mega events’ on host cities. The general consensus is that the consumer spend at London 2012 will far outstrip any previous games; it is predicted to be double that of both Athens and Sydney, and significantly more than Beijing. This is largely due to London’s accessibility, proximity to Europe and simply the higher cost of visiting the city.

Investment in the games has come at a crucial time. An approximate £6bn has been awarded in over 1,500 contracts to businesses across and beyond the UK; £6.5bn has been spent on infrastructure and it has necessitated a £2bn supply chain. The exposure and perceived success of some UK firms involved in the games has won them global contracts from big name companies and, in total, London 2012 is predicted to contribute £1.37bn to the UK’s annual economic output and sustain an additional 17,900 jobs each year until 2015.

Earlier this year the Harvard Business Review featured a number of articles exploring the ‘happiness factor’ in economics, assessing the impact of well-being and satisfaction on business and the economy. Large-scale sporting events create a vital feel good factor that is felt across all the nations who take part and create a positivity that cannot be measured in figures. Regardless of the bottom line, London 2012 has created and will sustain jobs for the foreseeable future, has provided British business with unique opportunities and has led to the largest urban development project ever seen in Europe. The excitement in London is building, and with most of the action taking place within just a few miles of the RSM Executive Office, we look forward to celebrating the games and the long term legacy.

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Author

Jean M Stephens
Chief Executive Officer

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