As the Summer Olympics unfold in London, news comes that the British economy is enduring a more severe recession than previously thought. Data from the Office for National Statistics estimates that Britain's economy is contracting 2.8 percent this year.
So, is hosting the Olympics hurting or helping?
This debate is as old as the games itself. As tradition dictates, some think the boost provided by the Olympics could lift Britain out of recession.
Others warn that any spike in economic activity that the Olympics provide is likely to be temporary, especially given that they are coming amid a global financial crisis. Early reports suggest the games are not as well-attended as organizers had hoped, dampening expectations that a surge in tourist spending could stimulate the local economy.
In fact, history points to the likelihood of a post-Olympic slump.
Typically in host countries, the two quarters preceding an Olympics show positive growth, while the two quarters following the games show a drop-off. Bucking the trend in a bad way, Britain's GDP growth was negative in the two quarters preceding the games.
Despite these economic woes, the British government is spending an estimated $17 billion on the London games.While this is less than half of the amount that the Chinese government spent on the 2008 Beijing Olympics, it remains a significant amount of money for a nation mired in debt to spend on a one-off sporting event.
What do you think? Is it justifiable to spend billions on the Olympics during a recession—especially with much of it spent on ceremonial pomp rather than on projects with proven long-term economic benefit? Or does the glory and hope of economic boost make the cost worthwhile?
"Britain shrinks again," The Economist, July 25, 2012
"UK Q2 GDP down bigger than expected 0.7 percent, extending recession into a 3rd quarter," The Washington Post, July 25, 2012
Rob Preece, David Williams, Chris Greenwood, and Katherine Faulkner, "Ticket touts disgrace," Daily Mail, July 29, 2012
2008 Summer Olympics, Wikipedia
Josephine Moulds, "Olympic Games could bounce economy out of recession, say analysts," The Guardian, July 25, 2012
Matthew Black, "Welcome to London's recession Olympics," CBC News, July 26, 2012
Photo Credits in order of Appearance:
Shimelle Laine [also for pictures 11 & 12]
janet isn't real
Moritz Hager/World Economic Forum
Alexander Kachkaev [also for picture 13]