What Is The Financial Legacy Of The London Olympics?

Much has been made of the need for the London Olympics and Paralympics to leave a lasting ‘legacy.’ However, exactly what that legacy would be has been largely unclear and incredibly open to interpretation. When talking about the Olympics’ legacy, there are a number of approaches analysts take. These approaches can be divided into different categories, namely the social legacy, financial legacy and sporting legacy.

Possibly the most important, and most widely debated, has been the financial legacy. Here we take a look at the financial ramifications of the games and what they may mean in the future.

Public finances

Historically, the Olympic Games have not resulted in any economic benefit during or after the event. This has occurred despite efforts to ensure that the Games do have a lasting financial effect once they’ve finished.

With the London Games, this has been of particular importance, largely due to the cost of funding such a lavish event in a troubling economic climate and at a time when wide-ranging social cuts are taking place. Interestingly, the majority of economic experts agree that the London Olympics will provide no lasting financial benefits going into the future.

In fact, much of the academic literature shows that exactly the opposite is true and that hosting big sporting events is actually an economic burden. When you think that £9.3 billion of public funds has been diverted into the Games, it becomes difficult to imagine that any financial benefit will match this expenditure.

london olympic

Photo source: http://www.flickr.com/photos/maykal/7662696650/

Personal finances

So it is widely accepted that there will be no great national financial legacy for the Games, but what about its impact on individuals and their personal finances? One of the biggest effects on personal finances was supposed to come in the form of a rise in the value of property across London, largely thanks to a number of large infrastructure projects and new public facilities.

However, studies by property experts have found that the value of property in a number of Olympic host boroughs has actually dropped slightly in the lead up to the Olympics. Instead, it is rental rates that have risen drastically, though these are expected to drop again as short-term tenants begin to move on.

Insurance

Finally, specialist insurance news outlets have been attempting to work out the long-term effect of the Games on the insurance industry. While there were huge effects during the games, in particular hikes in travel insurance due to the mass of exodus of London residents during the Games and alterations to home insurance for those renting out their homes during the event, it is incredibly difficult to estimate the long-term effect on the industry.

While it is largely accepted that the Olympics will not have a lasting positive effect on the national economic situation, how it will affect personal finances is very much unknown and largely depends on the way in which new infrastructure projects and facilities are used and how they affect the London population, as well as the rest of the country.

This is a guest post by Lloyds of London-specialist insurance market in the UK.

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