British Prime Minister Tony Blair on Wednesday confirmed that taxpayers would be expected to cover some of the costs for staging the Olympics, but insisted that the investment would more than repay itself.
“We have put together how we finance this, some from business, some from the City [London‘s financial district], some from taxpayers,” he said from Gleneagles, Scotland, where he was hosting the G8 summit of rich nations.
“But this will pay dividends for all of us. To have the Olympic Games in 2012 is going to be a huge thing for the country.”
London beat favourite Paris in the race to host the 2012 summer Olympics following the earlier elimination of Moscow, New York and Madrid during a series of votes in Singapore on Wednesday.
Bid organisers here say that 2.375 billion pounds sterling ($4.170 billion) has been earmarked to stage the games, with hundreds of thousands of jobs created as a result.
Billions more pounds was expected to be spent on private-backed investment, such as hotels.
But Paul Dales, author of an Olympics study and economist at Capital Economics, sounded a negative note over the economic gains to the country as a whole.
“Although there are many reasons why a London Olympics would be good for the UK, our analysis finds that the economic benefits would be very small and not worthy of a gold medal,” he said in a recent study.
The area around Stratford will
The impoverished region surrounding Stratford in the east of the capital was to undergo an economic facelift, transforming it into an Olympic venue for the two-week tournament in seven years’ time.
Economic forecasting group Experian predicted that a total of 8.6 billion pounds would be spent in London on transport and other infrastructure schemes.
“London‘s successful bid for the games will boost construction output in the UK,” said James Hastings, associate director of Experian’s business strategies division.
Initial building work could start as early as 2007, he added.
Rise in tourism
Tourism bosses were elated at news that the 2012 Olympic and Paralympic Games would be held in the capital.
“The games could be worth well over two billion pounds to our visitor economy,” said Visit Britain, the country’s tourism authority.
There would be an extra one million visitors to Britain during the 2012 Games, according to hotel and travel management company Expotel.
Business leaders cheered news of the Olympic victory.
“This is not just good news for business in London, but for the whole country,” said Miles Templeman, director-general of the Institute of Directors.
“Long-awaited regeneration of parts of London will now proceed, including the much needed upgrade of the public transport system.”
Manny Lewis, chief executive of the London Development Agency, a local body charged with aiding regeneration and development, added:
“The Olympic Games and Paralympic Games provides us with a once-in-a-lifetime opportunity to transform one of the most deprived parts of the capital… for the benefit of all those that live and work there”
“The Olympic Games and Paralympic Games provides us with a once-in-a-lifetime opportunity to transform one of the most deprived parts of the capital … for the benefit of all those that live and work there.
“Over the next seven years we will work to turn our vision for east London into a reality, delivering an Olympic Park fit to welcome the world.”
In his study, Dales said hosting the event may boost British economic output by about nine billion pounds – but that this would be a tiny sum compared with the total 1200 billion pounds’ worth of output generated in 2004.
“Moreover, spread out over the next 12 years, it would raise output by just 753 million pounds or 0.06% of gross domestic product (GDP) per year,” he added.
Although hosting the games would create 300,000 jobs, the bulk would be temporary, Dales noted.
After hosting the sporting spectacular, the Olympic village in Stratford would be converted into 3600 apartments, mostly comprising affordable housing.
Meanwhile, house prices could rocket by around 66% as a result of the games, major homeloan provider Halifax said.
Regeneration effects – including improved transport links and leisure facilities – would push up property costs in the area, it added.