One month and counting …

With the London Games just a few weeks away, Britain is gearing itself up for a month at the centre of the world stage; firstly as hosts of the Games, closely followed by the Paralympics.

Back in 2005, when Seb Coe and his team pitched their winning bid in Singapore, a cornerstone of their proposition was the regeneration afforded to Stratford in Newham, East London, one of the capital’s most diverse and economically deprived areas. With a £4bn mixed use regeneration scheme (which included the Westfield centre) already planned, the area afforded a sizeable brownfield site which could be redeveloped to house the Park.

So, seven years on and what has London 2012 Games brought to the UK?

In February of this year it was reported in parliament that at its peak (March 2011) work on the park and village employed 12,000 workers, including 450 apprentices across 27 trades. One legacy to the construction industry has been the opening of a National Skills Academy for construction, which has provided 3,500 training places for local people and Londoners to help deliver the venues and infrastructure.

Overall, capital spend generated by the Olympics has totalled just short of £10bn, of which the bulk - £7.2bn has been spent on developing and strengthening the transport infrastructure. The sports venues and Olympic village have generated a further £1.2bn of spend, whilst the Olympic Park infrastructure has come in at a cost of £1.3bn. The remainder has been spent on projects such as the International Media Centre.

And, as we all know, the project has come in on time and on budget – a real credit to everybody involved and something our industry should rightly be proud of for many years to come.

Over the next few weeks, attention will shift away to other sectors such as tourism and retail, both of which look set to benefit. In their May report, as well as looking at the economic consequences of the Jubilee, the Bank of England also attempted to quantify the Olympic effect. Their conclusion was that based on the 2000 Sydney games, we could expect the Games to give the UK economy a boost of 0.2% in GDP.

So, let’s fly the flag and look forward to a summer of sport like no other.

Jubilations or a damp squib?

In our last newsletter we looked forward to the Diamond Jubilee and gave a brief assessment of the benefits to the construction sector brought about by the Jubilee celebrations. But what of the impact on the wider economy? Will the Jubilee give us all something to cheer about when the GDP figures for the second quarter are revealed at the end of August or will it prove as damp as the river pageant?

Obviously at this stage it’s too early to tell which way the outcome will swing but the mandarins at the Bank of England have clearly given a great deal of thought to the likely economic ramifications of both the Jubilee and the Olympics. So much so that the May Inflation Report saw over a page devoted to “The impact of special factors on the path of GDP growth in 2012”. And what were their conclusions? Given that the Jubilee fell in the last month of the quarter, their view was that the effect on Q2 would probably be muted, but that overall, output was likely to be down, given the effect of business closures or extended holidays as owners and workers took advantage of the additional holiday. No surprises there then.  

The BoE did look back at the effects of two previous extra holidays, those granted for last year’s Royal Wedding and the 2002 Golden Jubilee. They concluded that overall it was difficult to accurately interpret data for the Royal Wedding as supply chain disruptions from the Japanese earthquake also fell in that quarter, but that on balance an attributable drop in output in Q2 of 0.4% was probably balanced by a commensurate rise on output of 0.4% in Q3. A similar pattern was revealed by the Golden Jubilee. In their May report, the BoE’s view was that the Diamond Jubilee would lower growth by 0.5% in Q2, but that it would be balanced by a half percent uptick in Q3. However, the courage of their convictions wasn’t overwhelming; they noted that  “… there are risks on both sides of that central judgement.”

One early beneficiary though were retailers, particularly the food giants, who reported an immediate benefit from the Jubilee weekend – sales rose by £213m in the week running up to the celebrations, buoying expectations for a bumper growth in sales over the Olympic period.

Hurrah at the Gay Hussar – today Nichola enjoyed lunch at the Gay Hussar, met some very influential people in the property and construction industry and lapped up the old school atmosphere of this former Socialist den in the heart of Soho.  Looking forward to the next one…..