Report 4: Interim Evaluation

H.2Economic

The economic impacts of the Games are occurring through two broad mechanisms. The first relates to the direct demand side effects on expenditure flows. Patterns of spend directly related to the preparation and staging of the Games can be derived from the management information systems of the ODA and LOCOG. The second mechanism relates to the ongoing impacts associated with legacy interventions and other indirect effects where supplementary analysis is required to generate outcome estimates.

Using a modelling approach it is estimated that ODA spend could have resulted in gross impacts of £8.2 billion of GVA (£2008 prices) and approximately 175,000 job years of employment in the UK over the period from 2007 to the end of Q1 2012. This gross impact is based on £6.5 billion of spending by ODA during this period.

Applying our displacement assumptions, our net UK GDP impacts are 88% of the level of the gross impacts above. The net GVA impact is estimated at £7.3 billion (£2008 prices) and the number of job years falls by just over 10% to 158,620.

The economic modelling planned for Report 5 should benefit from more accurate displacements assumptions arising from the various on-going evaluations and studies.

The London, South East and East of England regions have enjoyed the bulk of economic benefits of ODA spend in terms of GVA and employment. However some significant benefits are estimated in regions further afield while other regions and nations have benefitted substantially from impacts through the supply chain. Interim evaluation evidence indicates that there has been a good geographical spread of businesses registered on CompeteFor, the portal which was established to ensure equal access to information on Games opportunities.

There is limited evidence to date of the ongoing economic impacts of the Games. The LDA's evaluation of LEST, the key Games-related employability and skills initiative in London, estimates that the programme generated net GVA of £219 million up to the end of 2010/11 by enabling job vacancies to be filled. According to recent research for London and Partners, the net tourism gain to the UK economy of the Games could be up to £1.24 billion (at 2011 prices) for the period 2007-2017.