11 Jul, 2012

Lloyds Bank Study Pitches “Happiness Impact” of UK Olympics

Imtiaz Muqbil

London, UK (PRWEB UK) 10 July 2012 – A report commissioned by Lloyds Banking Group on the Economic Impact of the UK 2012 Olympic & Paralympic Games, also includes a chapter assessing the impact of the events on UK residents’ happiness.

The report, covering the period from the winning of the bid in 2005, through until 2017, says that the events are driving both short- and long-term activity across the key sectors of construction and tourism, leading to jobs, expenditure and business opportunities across the UK. SMEs are contributing more than half (52 percent) of the overall increase.

At the same time, the report assesses the “intangible impact” by citing a number of studies suggesting that holding major events may generate a “temporary feelgood factor” for local people from the enjoyment of attending the sporting or associated cultural events, volunteering, proximity of the events, or national pride.

It cites one study of major sporting events (Olympic Games, FIFA World Cup and UEFA European Championships) over a 24-year period. The results suggest hosting the football World Cup or European Championships has a statistically significant and positive impact on happiness in the host country. This was true for wide sections of society (over 50 years old, under 50 years old, employed, no higher education, earning high or low incomes).

Although it is a short-term phenomenon, the feelgood factor can be sizeable. The 1996 UEFA European Championships in England generated a “happiness gain that was equivalent to a monetary gift of £165 for every man, woman, and child.” However, it also suggests that the happiness effect might not be equally shared across the nations and regions of the UK.

The study says that sports events also help unite people, motivate/inspire children and improve awareness of disability. It can also have a positive impact on consumer confidence.

One study finds the willingness to pay to host the 2012 Games was around £22 per household per year in London and £12 per household per year in Manchester and Glasgow (over a period of 10 years). Of the people surveyed, a higher proportion felt that intangible benefits were more important than tangible effects (e.g. increased tourism spending). This was particularly the case in Manchester and Glasgow relative to London, with 48% versus 42% feeling the intangible benefits were most important.

However, the report noted that other studies acknowledge the existence of negative impacts on the resident population due to factors such as increased traffic congestion, security concerns, environmental degradation, disruption of residents’ lifestyles and the cost of investment.

It also cites the correlation between the happiness factor and the medal tally of the home team. The UK team performed magnificently at the last Olympics in Beijing in 2008, which “opens up the prospect of a dent to our national happiness if the team fails to beat the high-water mark of the last Games – something that happened at the 1948 Games.”

Patrick Foley, chief economist, Lloyds Banking Group, was quoted as saying: “London 2012 is the most important sporting event the UK has ever staged. However it is also impacting our economy in a way that cannot be ignored. We’ve witnessed a construction project on an unprecedented scale, the economic ripples of which are being felt not only in the Host City, but across the UK.

“As this study demonstrates, London 2012 will help support employment, tourism, consumer spending and living standards, not only this year, but for many years to come. And it could not have come at a better time, given the tough conditions in the UK economy.”

The following is the text of the official press release:

Overall economic impact

Most of the GDP effect linked to the Games (57 percent) stems from construction projects occurring before 2012, including the building of the Olympic Park and the development of other sites and venues across the UK. Games-related tourism across the UK during London 2012 and over the first five legacy years is expected to deliver 12 percent of the GDP contribution, while spending on the staging of the event itself is expected to contribute six percent. The remainder of the impact, 24 percent, is due to legacy construction activity.

The study also shows that the Games will also help support and create the equivalent of more than 62,200 jobs in London and across the UK.

Although most (70 percent) of the total GDP impact expected from London 2012 will come from the period in the run up to and including the Games, the five year “legacy” period could generate as much as £5 billion, nearly a third (30 percent) of the total economic effect expected from the event.

The economic impact is spread across the UK, with London delivering £6 billion of the overall contribution and other parts of the UK responsible for the remaining £10.5 billion.

Key sector impacts

The key sectors of construction and tourism are expected to provide the largest contribution to GDP:

Construction

• Games related construction activity will have contributed £13.5 billion to GDP by 2017.

• Of this, £4.5 billion will come from pre- and post-Games construction work, while £5.8 billion will be delivered by firms providing supplies to London 2012 construction companies. A further £3.3 billion is expected from spending by construction workers and employees within the supply chain.

• The 800 construction related contracts awarded to UK suppliers by the ODA, have been spread across the regions. With 25% going to suppliers based in London and 75% to firms in the rest of the UK.

• The GDP impact from construction comes from the preparation of the Olympic Park site (£2.3 billion) and building of the main venues (£1.3 billion), while conversion of the Athlete’s village into housing and building of retail space in the Park after the Games will also contribute around £4 billion.

• A total of 267,000 jobs are expected to be created and supported as a result of London 2012 construction. Approximately 70 percent of employment from Games-related construction will come in the run up to and during the Games, while the remainder will come in the legacy years.

Critically, 59 percent of the anticipated construction related GDP will occur outside the capital, as a result of construction firms’ purchases from their supply chain and spending by their own employees.

Tourism

By the end of 2017, London 2012 related tourism – where visitors come to London as a result of its status as an Olympic City – is expected to have generated £2 billion in GDP, across England, Scotland and Wales. Three percent of this GDP impact will be generated in the period before the Games; just less than half (49 percent) during; and a similar amount (48 percent) in the five legacy years.

• A total of 10 million people are expected to visit the Games competitions, with approximately 1.2 million (12 percent) of these coming from overseas.

• The net effect on UK tourism over the entire period covered by the report (2005-2017) is that there will be an estimated 10.8 million additional visits, including 400,000 pre-Games business trips and over 1.6 million visitors after 2012, as part of the Olympics’ legacy effect.

• An increase in regional tourism is expected as Londoners and other UK residents look to avoid the Host City before – and particularly during the Games – and as a consequence of foreign tourists visiting other parts of the UK during their stay.

• Hotels and restaurants will experience the biggest impact — they will feel 22 percent of the anticipated tourism-related GDP impact, while retail and transport will provide 10 percent and 16 percent, respectively.

• Tourism attributable to London 2012 is expected to support or create more than 31,000 jobs across the UK in 2012 — 5,700 in London and 25,300 elsewhere – in particular in the North West, South West, South East, Scotland and Wales.

Download the full report here (Free but registration is required).