Olympics to Provide UK Economic Boost? Maybe…

It’s no secret that modern day Olympic host countries have come to view the arrival of the games as a chance to receive an economic adrenaline shot. With England mired firmly in the throes of double-digit inflation, British politicians and economists alike are crossing their fingers that the positive effects of the London festivities will be felt long afterwards. But is conventional wisdom right? Does the presence of the Olympics really help that much financially?

The answer to that is a resounding hedging-your-bets it depends upon whom you ask. The host country, perhaps in a willing suspension of disbelief, looks at the positives and ignores the negatives. More unbiased economists like the folks at Moodys think the distant future effect of the Olympic Games is negligible. We’re not going to enter that argument here but rather present an admittedly incomplete list of the pros and cons to playing host to the world.


  1. Urban regeneration – Can you say a brand new 80,000 seat stadium?
  2. Housing – After the games, they’ll turn the Olympic Village into rentals.
  3. Transportation Improvements – In order to get the thousands of spectators, athletes, officials, and media to the games, the London transportation system gets a sizable upgrade.
  4. Tourism – Conventional wisdom believes London’s increased exposure during the games will provide a longer term boost in tourism. Call it the “oh yeah, I forgot about London” factor.


  1. Cost – There’s no way around it. Hosting the games is a big upfront expense, to the tune of a few billion dollars. City planners hope the initial $500 million operating loss will be offset by increased tourism.
  2. Jobs – Sure, there are plenty of jobs created in the months and years leading up to the event but does anyone really believe unemployment isn’t going to spike in the aftermath? The area had high unemployment coming in, and in the absence of any grand economic plan, will likely return to those same doldrums.

What’s the best reason to go see the 2012 London Olympics? Well, if the Mayan calendar turns out to be right, these are the last games that will ever be held. After all, the world ends on December 21, 2012. Good luck. Hope to see you on December 22nd.

The American Monetary Association Team





Flickr / Nicholas Heasman-Walsh

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