Hosting the London 2012 Olympic Games will not bring a lasting economic benefit for the UK, according to a poll of economists (Reuters)
London 2012 will not be a springboard to recovery for the UK's recession-mired economy, according to the latest poll of economists, as the financial benefits of hosting the Olympic Games comes into question just a fortnight ahead of the opening ceremony.
There will be no lasting effect on the economy from the increase in activity around London 2012, such as flocks of incoming tourists with pockets full of spending money, and the biggest financial impact will be felt in the capital city - which is already fairly insulated from wider economic woes.
In the poll, conducted by Reuters, 23 of 27 economists did not think London 2012 will provide any meaningful long-lasting boost to the UK economy.
However 19 did think that there would be a short-term lift that may help lift GDP to a small amount of growth in the third fiscal quarter, when the Olympic Games takes place.
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Of 28 economists asked, 26 thought the biggest positive economic impact would occur in London.
The government believes London 2012 will bring in £13bn across the next four years. Taxpayers will have a bill of between £9-10bn for hosting the Games.
Britain's economy plunged back into recession at the start of 2012, its second in four years and the first double-dip since the 1970s.
A collapse in construction sector output dragged GDP down to two consecutive quarters of -0.3 percent contraction, from the last three months of 2011 to the first quarter of 2012.
Recent sluggish growth in the service sector, with continued contraction in manufacturing and construction output, on top of a fall in output from the Queen's Diamond Jubilee celebrations because of public holidays, suggest recession will carry on into the second quarter.
Bank of England economists stressed their uncertainty over the potential impact of London 2012 on the economy.
"The level of tourism may be higher as a result, although it is not clear to what extent tourism associated with the Games will displace some tourism that would have otherwise occurred," said the Bank's most recent quarterly inflation report from May.
"And transport disruption and a concentration of more people than normal taking holidays in Q3 could reduce the output of businesses, particularly in London.
"So it is uncertain what the net impact of these types of effects will be."
It compared the economic impact of Sydney 2000 to Australia with the UK's current position and spending in the build up, estimating a 0.2 percent boost to the economy if London 2012 follows a similar pattern.
In conclusion the Bank said that the third quarter should see "slightly higher" growth because of the Olympic Games, but this will be reversed in the fourth quarter "as output returns to its normal level".
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