Why we will never know if the Olympics were worth the £12bn they cost

There have been many dubious claims about the benefits the Olympics have brought. But we will never know if any of them are true.

I pointed out on Twitter last week that the Olympics hadn't had quite the effect the government was hoping for.

Back in April 2012, 15.4 million people were said to be exercising for at least 30 minutes once a week. A year later with the Olympics just a happy memory that number is 15.3 million. Given that the main legacy of the Olympics was supposed to be a healthier and fitter population, that's got to be a disappointment.

Could we now, I asked, stop pretending that the Olympics, while piles of fun for lots of people, had actually been worth the £12bn-odd (some three times the original budget) we spent on it?

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As a reply, one reader sent me this- a claim from the government that the Olympics "boosted the UK economy by £9.9bn." This sounds nice, and there was surely some increase in interest in UK firms as a result of the intense government spending around the event. But, as hordes of economists lined up to report, "there is no way of testing" the truth of the figures.

The story was picked up by the FT this weekend, which quotes many more economists noting that it is impossible to know how much of the business included in the figures would have happened anyway. It is, says Tony Travers of the LSE with some generosity, "a stylised interpretation of some possible economic impact".

You can also be pretty sure that any negative effects haven't been included restaurants in London have complained, for example, that they saw a fall in business as people were discouraged from visiting the capital. Other companies complained that a protocol protecting the sponsors prevented them from advertising their own Olympic work, and the British Retail Consortium reported a fall in retail spending in August 2012 because everyone was too glued to the telly to shop.

The Olympics were pretty good; there may have been good social effects (a rise in volunteering, perhaps, and an improvement in national attitudes towards the disabled); and there will surely have been good, if unquantifiable, financial benefits (although these obvious accrue to the private sector rather than the financier of the event the taxpayer).

But the insistence that it doesn't matter what the Olympics cost because they were such fun is just silly. It does matter. The original budget for the party was a mere £2.4bn. So pretending that it came in under budget and then pretending that we have already made that money back in "boosts" to the UK economy is pointless PR guff.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.