London 2012 and the feel good legacy

 As the Autumn evenings draw in, it's a good point to reflect on the monumental summer which the UK and London in particular has just enjoyed.

The rather damp, but hugely successful Diamond Jubilee now seems a lifetime away, following the gripping six weeks during which Olympic fever reigned over Britain. From the spectacle of the Opening Ceremony to the unbelievable success of the Paralympics, Britain showed the world that we really can be Great!

It is easy to forget amidst all the excitement that one of the great promises made back in 2005 was the legacy which the Olympics would bring to the UK. “Sport for All” was one of the most important aspects of that legacy, but there is also a significant economic legacy to be exploited, not least of all for our sector.

The economic forecasting group, Oxford Economics, were commissioned by Lloyds Bank, one of the principal Olympic sponsors, to produce an assessment of the long term economic impact of the Games. Unlike many other studies, their report set out to look at the overall effect of the Games, from 2005, when the Games were awarded to London, through to 2017.

In summary, the report estimates that overall the Olympics will support a contribution of £16.5bn (2012 prices) to UK GDP over the twelve year period, of which 70% is expected to have been generated prior to the Games, with the balance occurring as part of the legacy. Breaking it down further still, pre-Games and legacy construction is likely to account for 82% of that GDP contribution, tourism 12% and the actual hosting of the Games, 6%.

Not surprisingly, London is expected to account for 41% of the GDP supported. Regionally, the balance is spread 9% in the South-East, 7% in the North-West, 5% in the East Midlands, with the remainder being spread across the East of England, Scotland, West Midlands, Yorkshire & Humberside and the South-West.

In amongst the report are a whole host of fascinating statistics:

• Between 2005 and 2017 the Games are likely to generate the equivalent of 354,000 years of employment, with 78% of that figure occurring in the construction sector

• SMEs are expected to receive 52% of the additional expenditure associated with the construction of the Games and their legacy

• Construction alone will support a spend of £11.9bn over the twelve year period. The total contribution to GDP from the construction sector is estimated at 13.5bn, when the supply chain multiplier is factored in

• There is still a legacy spend of £4bn on construction to come  over the next 5 years, which will be generated by projects such as the conversion of the athletes' village into residential space, alterations to Stratford Station to accommodate Crossrail and other commitments to build retail, office and residential space

• Expenditure to date has benefited companies right across the UK, with 800 firms receiving contracts from the ODA 

• On top of the actual construction spend, multiplier effects suggest a contribution to GDP of £5.8bn (2012 prices) from input procurements for the construction industry supply chains.

The report also examined the impact on other areas of the UK economy, such as tourism, the labour market, expenditure incurred on actually staging the Games and what they termed "The Happiness Factor".

The conclusions they drew were fascinating. Games related tourism, for example, is expected to generate an additional £2bn contribution to GDP and will support the equivalent of 61,000 years of employment over the twelve year period 2005 - 2017. A net increase of 10.8m in tourist visits is anticipated over the same period. Interestingly, in terms of GDP contribution, it is estimated the 17% will occur in the lead-up to the Games, 35% during the Games themselves and 48% after the Games, which suggests there is still a sizeable contribution to come.

The Happiness Factor was another interesting area as this is obviously very difficult to quantify in monetary terms, but the report looked at other studies, which suggested that hosting major events can increase happiness levels amongst the home nation's residents. Euro 1996, the nearest example we have to draw upon, was estimated to have boosted the nation's happiness by an extra £165 for each citizen. This can translate to an increase in consumer confidence, but the statistics don't uniformly support this view.

One of the clear messages conveyed by the report is that even though the spectacle of the Games may have ended, we as a nation still have a great deal to look forward to. £4bn of construction activity is still in the pipeline, as is £1bn of tourism revenue. The regeneration of Stratford and Newham has led to long-standing improvements in health and well-being, as well as a reduction in crime levels. 3,850 new, affordable homes will be created. These improvements are estimated to be worth £130m per annum. Add into that improved job prospects for the 78,000 workers involved in the construction projects and a further £504m is generated. Furthermore, 3,000 of those workers were previously classified as being long-term unemployed. The skills and opportunities the Olympics gave them is estimated to raise their life-time earnings by £40,000 per worker.

So, not only did we enjoy a fantastic summer, which showcased Great Britain at its best, there is also plenty more to come.