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The Olympic effect won’t be so golden for politicians

30 August 2012

The Olympics and Paralympics have been a superb spectacle this summer, but will they help the economy? No one in the Treasury thinks so – if anything, they fear the games will hurt the figures and pretty soon we’ll be hearing about the ‘Olympic Effect’ damaging Q3 growth figures. George Osborne is already being mocked for his habit of blaming downturns on snow, holidays etc so I suspect the Chancellor will not mention it. But when first class returns from London to New York were half the price they normally are, you have the feeling not much business is being done.

Today, the first economic indicator has come suggesting an Olympic effect. Each month, the European Commission takes an Economic Sentiment Index. Today’s reading has dropped markedly in at the lowest since May, suggesting zero growth in Q3 to follow on from the zero growth in Q2. If Ed Balls were around, he’d make his ‘flatlining’ gesture to illustrate the point.

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Previous Olympic host countries have found an economic bump in the preceding months (due to construction, etc) but a dip during the games. So, if anything, the UK’s dire Q2 data could have been flattered by the Olympics. And seeing as the London games were held in the main economic centre, displacing other activity, there is every reason to believe that there will be a more pronounced effect in our Q3. So our ministers ought to enjoy the remaining events of London 2012: pretty soon, political payback time will begin.

UPDATE: The Bank of England forecasts that the Olympics would be good for the economy, albeit to a limited degree. The below from a press transcript from its chief economist, Spencer Dale (pdf)

” We expect if anything a small positive contribution. The impact that that comes from is not through lots of tourists shopping more, it’s via the impact of both the ticket sales, which although many of us bought tickets earlier in the year they actually count in terms of GDP in Q3, and also the TV rights to the Olympic Committee are also counted in Q3. There may well be some extra spending from tourism, but as many of us know there has also been travel disruptions, more people are going on holiday, so I think those effects are small. But the contributions from both ticket sales and TV rights may lead to a very small boost to GDP in Q3.”


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  • 2trueblue

    It is hardly rocket science to work out that once the project is finished you have to find other projects to sustain economic activity?
    What the Olympics has show is that GB can run big projects on a scale to be envied, and on schedule! Despite the media latching on to every problem prior to the opening of the games, we got there, and so far it has been a great success. It produces a feel good factor which has a value.

    The EU is also in all sorts of trouble and the financial services was the one big area for the UK which is now in big trouble, both here, in the EU and the US.
    Balls, Milliband, Brown, Whelan, et al left a very poor legacy behind so hardly have a lot to crow about real experience at managing problems we are experiencing right now.

    Long term unemployment and child poverty are just 2 of the things that grew during their tenure, so am fed up of the continual harping ‘What will Balls say”. Remind me what Balls legacy is? What great thing did he do for GB? He is a ‘rent a mouth’ for the BBC. That is what he is good at. THe BBC could do themselves a favour and rather than look at failed politicians and their in house economists, look outside to get a real handle on how we get out of the mess. None of them saw it coming and were not interested in anyone who differed with their viewpoint.
    It is rather akin to the attitude of those who will not accept that some of us could be right about our membership of the EU.

  • MaggieLavan

    4000 foreign business leaders, bigwigs and politicians attended numerous global investment conferences, lunches, dinners, meetings and gatherings in London during the Olympics. How very depressing if not even one of them was tempted to invest here.

  • TomTom

    Greece did well out of the Olympics in 2004 after all Evangelos Venizelos is a very well-fed politician and he was in charge of Olympics matters……and he is an inspiration to all Greeks with axes to grind

  • Daniel Maris


    Really you and your colleagues need to face up to the growing crisis of mass immigration.

    From the Daily Mail today:

    “A record one in four of all babies born in
    England and Wales last year had a foreign mother, it was revealed
    Most of these women came to Britain from
    Poland, Pakistan and India to give birth to a total of 184,000 children in NHS
    hospitals in 2011.
    Almost half of all these births were in
    London, which has a foreign mother rate of 56.7 per cent, far above the national
    average of 25.5 per cent.
    In Newham, east London, more than three
    quarters of new mums were born outside the UK but choose to give birth
    There is no doubt now that mass immigration is having a considerable negative effect on per capita GDP and – most importantly – people’s disposable income.

    It’s your duty to come up with some ideas on how we are going to address this national crisis – as bad I would say as the external crisis of the 1930s for this country. So far we have heard nothing – except indications you don’t consider there is a problem.

    We’ve only just seen the start of this crisis – the waves are going to come crashing in on schools and housing as well over the next few years.

    • TomTom

      Ah Daniel, you have not had silver-spoon-poisoning an insidious illness that causes arteriosclerosis in the cerebral cortex…..I fear Cameron, Clegg, Osborne et al have had severe doses since birth

      • Daniel Maris

        Well it’s true it’s easy to be magnaminous if you’ve got a few mill in the bank and can insulate yourself from the problems your policies cause. :)

    • Fraser Nelson

      You’re worried about babies?

      • TomTom

        Bunnies grow up to be rabbits Fraser……

      • TomTom

        Bunnies grow up to be rabbits Fraser……

      • Daniel Maris

        I’m not worried about babies – I’m worried about what’s done to many of those babies a few years later in the parallel school network about which you, your journal and the Department for Education appear to be blissfully ignorant…how you are able to maintain that ignorance, I’ve no idea (must be sheer willpower). I am also worried about the sheer numbers we are talking about. I don’t want a country of 75 million for my children and grandchildren to live in – the official figure – or 100 million more like at the rate we are going. The ONS have already had to admit the negative effect on per capita GDP growth, something again the Spectator studiously ignored prior to the ONS announcement.

        We know these are “not to me” concerns as far as you go. But we know from secret embassy cable traffic revealed by Wikileaks that behind the scenes these things ARE a cause for serious concern in government.

  • martsharm

    But poor economic performance surely will come as no surprise to Osborne et al. In fact, all the evidence suggests that they positively wish the productive economy to languish, as no efforts at all are being made to unshackle the chains that bind it. An example – I am personally being taxed out of work. It’s simple mathematics – a self-employed person earning a reasonably modest (on average, workers with 10 years experience earn £36k) £175 a day will hit the 49% tax bracket (40% income tax + 9% NI) a couple of months before the end of the tax year. Their take-home pay at this point will be little more than half the minimum wage (£175 – £25 expenses – 49% tax – £35 childcare @ 10 hours = £4.25 per hour). I am not prepared to miss a day of my child’s life for the paltry sum of £4.25 per hour. So I don’t work, the community doesn’t benefit from my profession, and the taxman doesn’t get any money because I haven’t worked.

    The 49% tax band is but one of many economically suicidal disincentives to work that exist, along with reams of pointless regulations in all walks of business. I sometimes wonder why people bother running businesses at all.

    Message to Osborne et al – CUT TAXES AND RED TAPE, and the economy will grow. It’s obvious. To continually fail to do so is a positive indication that those in charge do not wish the economy to grow, although why this would be a sensible approach I cannot think.

    • RKing

      Where I live the car park charges are so high that no one uses them.
      They just sit empty all day and everyday.
      Result no income.

      A simple analogy but how true!!

      • MaggieLavan

        That’s a planning ruse. When the owner of the car park submits plans to build an office block on the site he can say he tried to operate as a car park but there is no demand.

        • RKing

          It’s public owned and run by the local council.

          • James102

            In that case they will put the price up and project the imaginary profits into their next budget.

  • Heartless etc.,

    MY sentiment, EUSSR please note, – about the EUSSR, the Olympics, your lapdogs in Downing St, together with all the other machinations of your reprehensible organisation, although sayable, is unprintable.

  • Faceless Bureaucrat

    BREAKING: Olympics cost the UK more than it earned!
    Who knew?…

    • Daniel Maris

      Shocking! I never thought that could happen!! LOL

      • Frank P

        Made Danny Boyle happy though.

        • guest

          That great socialist Danny Boyle

        • guest

          That great socialist Danny Boyle

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