Austere spending policies officially pushed the United Kingdom back into a recession in April, and thanks to British Prime Minister David Cameron’s insistence on continuing austerity, the UK is experiencing a slower, more sluggish recovery than the one that followed the Great Depression. This austerity has not spread to the 2012 London Olympic Games, which are now set to be the most over-budget games in nearly two decades, Bloomberg reports:
The London 2012 summer Olympics are on course to be the most over-budget games for 16 years after organizers failed to forecast demands for security and private investment, according to a study by the University of Oxford.
The sports-related expense of hosting in the British capital is likely to cost more than twice the original estimate, researchers from the university’s Said Business School said in a paper. That’s the most since the 1996 summer Olympics in Atlanta, when costs overran by 147 percent.
In 2007, the British government tripled its original budget for the games to £9.3 billion ($14.5 billion). The true cost for taxpayers could end up being nearly £12 billion, Sky Sports News found in January. According to that investigation, the total taxpayer cost of the games could burgeon to £24 billion ($37.5 billion), counting increased spending on security and infrastructure aimed largely at the Olympics.
The British have pitched the games, as governments always do, as a benefit to the local economy. “The £300m already spent on tickets also means the economy is guaranteed to grow by 0.1pc during London 2012, while surveys say overseas visitors will spend around £700m,” according to the Telegraph, and Visa Europe estimates the games will generate £804 million in short-term consumer spending and £5.33 billion ($8.3 billion) over the next four years.
Assorted studies of major sporting events have shown that these estimates, however, are almost never accurate. Much of the estimated spending would have likely occurred anyway, either by British citizens or tourists who normally visit the British Isles in the summer months. Visitors to Great Britain, for instance, spend roughly £18 billion a year, more than 25 times as much as they’re estimated to spend at the Olympics. Other sectors of the British economy, meanwhile, will suffer because consumers will stay away to avoid Olympic crowds. Greek officials actually estimated a 10 percent fall in tourist visits during the 2004 Athens Olympics.
Some of the spending induced by the Olympics, such as the money aimed at improving public transportation and other infrastructure projects, will indeed benefit the British economy. But in terms of the country’s overall health, using money spent on the Olympics on targeted stimulus to combat the recession and sluggish recovery would have been a much better investment.