London 2012 may produce a "distinctly lacklustre" boost to the UK economy and fail to recover the lost output from the -0.7 percent contraction in the second quarter, according to a research note from RBS.
Retailers have failed to see any meaningful uplift from the Olympic Games, with London's West End suffering in particular, while private industry data for July shows a worsening performance in two of the recession-hammered UK economy's three main sectors.
"There are growing risks that the Olympics will fail to provide a much-needed injection for the UK economy," said the RBS note.
"Overall, the early survey data and anecdotal evidence from consumer-facing parts of the service sector do not convey much sense of any significant Olympic boost."
RBS said that while expectations had been of 1 percent GDP growth in the third quarter, just 0.5 percent is looking the more likely figure.
A low comparative base, falling inflation, and boost from London 2012 were all expected to push the UK back to growth in the three months to September.
"The key issue vis-à-vis Q3 is not so much whether growth resumes, but the magnitude of any pick-up in the quarter: symbolically, the main benchmark is whether the Q3 gain more than recovers the Q2 loss," RBS said.
"The latest survey data and anecdotal evidence signal rising risks of a disappointing Q3 rebound."
Purchasing manager surveys compiled by Markit showed that in July, at the start of the third quarter, manufacturing sector output slowed to a 38-month low as it continued to contract.
Similar data for the service sector, the UK's largest accounting for around three quarters of overall GDP, showed growth slowing to a 19 month low.
Britain's construction sector, which played a big role in dragging the country into its deepest double-dip recession in fifty years, returned to marginal growth in July.
While this was broadly positive, its comparative June data, which saw output hit a two year low, meant some had hoped it would deliver a better performance.