London 2012: Despite Tough Economy, Glimmers of Optimism

The economy continues to struggle in much of the non-Asian world, and the UK's economic austerity program does not appear to be helping. The National Institute for Economic and Social Research (NIESR) said that the UK won't return to 2008 growth levels until at least 2013, a 5 year period of lost opportunity. Unemployment has risen (again) in the UK as well over the past few months. The NIESR states that additional stimulus is needed, or the situation is unlikely to improve. And, of course, the political climate in the UK suggests such a stimulus is unlikely. In the midst of these challenging times, questions about the costs of the forthcoming 2012 Olympics are inevitable. But should the tough economy cause government planners and the London Olympic Committee to scale back plans, or even cancel the Games? According to a BBC blog by Roger Mosey (the BBC's director of London 2012), the answer is no. As he states, the "prospect of a 2012 with the Olympics in London is still a better prospect than one without." As I point out in my forthcoming book The Olympic Games Effect, hosting an Olympic Games is a daunting, complex task with potential benefits that rise above pure economic gain. While not all host cities generate sustained economic benefit (indeed, many of the Economic Impact Studies produced during the host city bidding process often overstate the actual economic gains), there is evidence that suggests a well-coordinated host city strategy comprised of pre, during, and post Olympics phases that actively plans for leveraging the investment for years afterward, can stimulate a sustained and positive outcome. There is also evidence that the Olympics serve to lift the spirits and infuse a collective sense of societal optimism for both the host nation and countries around the world. Does this mean that London 2012 will inspire an economic turnaround in the UK? The Olympics alone cannot accomplish such a Herculean task, despite the Games' reputation for inspiring super human performances. But cutting back London's Olympic investments (effectively creating an 'Olympics lite') would send a far more severe, negative message about the UK, the Olympics and the economy as a whole. Part of what drives market behavior is a sense of confidence, and ensuring the 2012 London Olympics are given every chance to succeed will help build confidence, which is certainly a vital task in stimulating economic activity.

Comments

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It`s true that the whole Europe is in tough recession these days, but I personally see a progress in UK and the financial changes that they made. After the refuse to join the new EU, London will have better opportunity to be a "single player" in financial trades and Olympics 2012. Good article.