The Economics of London 2012: some early indicators

Stefan Szymanski

Department of Kinesiology

University of Michigan

London’s Olympic commitments

• From the outset, London put legacy at the heart of the bid and made an early commitment to delivering on key objectives

• to make London a world-leading sporting nation

• to transform the heart of East London

• to inspire a generation of young people

• to make the Olympic Park a blueprint for sustainable living

• to demonstrate the UK is a creative, inclusive and welcoming place to live in, visit and for business.

East London and Olympic Park legacy

• Classic inner city blight- decline of traditional industries

• Poor communication links

• Low quality housing stock

• Low quality services- health and education

• Poorly qualified workforce, low employment

• Social problems

• High population turnover- inward and outward migration

The scale of the problem

• The population of East London is around 2 million

• East London covers of around over 500 sq. kilometres (depending on definition)

• The Olympic Park covers an area of about 2.5 sq. kilometres

• Employment in the Olympic Park is expected to be around 8-10,000; it is expected to provide 11,000 new homes

Olympic site

97.8 96.1

103.9

97.4

101.1

122.3 97.7

151.9

139.6

113.3

81.4

82.0

126.3

67.1

107.0 112.3

103.5

149.2

98.8 167.5

104.4

163.7

81.8

90.7

110.4

141.4

124.7 128.4

101.6

147.6

96.1

118.4

Employment levels by London Borough

4947 2653

5451

2509

2114

5610 6575

5664

4839

5275

6711 5000

3593

1859

953 1991

1709

994

2253 1936

2776

4778

2196

1580

1972

6607

1078 7689

2013

1702

3248

1440

Employment per square kilometre

Growth rates of

employment in London boroughs

Borough

Average annual growth rate of

employment 2000-2010

Average annual growth rate of

employment 2005-2010

Hackney (host) 2.91 5.66

Tower Hamlets (host) 2.42 4.39

Southwark 2.60 3.31

Lambeth 2.64 3.15

Camden 3.83 3.04

Islington 2.68 2.63

Hounslow 1.20 1.70

Westminster 3.94 1.53

Richmond upon Thames 1.78 1.47

Wandsworth 1.80 1.47

Brent 0.93 1.40 Sutton 0.18 1.35

Merton 0.84 1.17

Kingston upon Thames 1.86 1.11

Barking and Dagenham 0.17 1.05

Waltham Forest (host) 0.14 0.97

Greenwich (host) 0.85 0.86

Hillingdon 0.47 0.80

Kensington and Chelsea 2.76 0.75

Newham (host) 1.48 0.74

Bromley 0.86 0.66

Croydon 1.04 0.48

Barnet 0.04 0.20

Harrow 0.46 0.16

Havering -0.28 0.15

Lewisham 1.48 0.02

Haringey 0.44 -0.21

Hammersmith and Fulham 1.45 -0.27

Redbridge 0.48 -0.59

Bexley 0.34 -0.72

Enfield 0.12 -0.78

Ealing 1.00 -1.03

Non-Host London borough 1.25 0.88

Host boroughs 1.52 2.44

Changes in employment by sector 2005-2010

Greenwich Hackney NewhamTower

Hamlets

Waltham

Foresthost

Non-host

boroughs

Total 21,300 59,600 27,000 57,300 33,200 198,400 450,500

Manufacturing -5,000 -6,600 -2,300 6,900 3,100 -3,900 -15,500

Construction -16,200 -5,000 6,800 -1,900 7,000 -9,300 69,000

Distribution, hotels and restaurants 9,700 4,300 6,600 -3,200 12,500 29,900 -148,400

Transport and communications 8,800 -1,200 -9,400 1,500 -14,400 -14,700 -21,000

Banking, finance and insurance 36,200 32,300 9,500 29,400 -14,700 92,700 290,900

Public administration, education and health -13,700 29,000 18,300 29,600 24,800 88,000 185,600

Other services 4,500 -900 -6,400 -3,300 5,900 -200 14,000

Pre-games estimate of impact?

• Infrastructure will raise the level of amenities

• Buyers in the housing market will anticipate effects

• Kavetsos (2009) examined the impact of the Olympic announcement on property prices

• Estimates derived for properties in concentric rings around the Olympic site

+5%

+2%

+2.2%

6 miles

12 miles

18 miles

Impact on property prices

Source: Kavetsos (2009)

Impact on property prices and the host boroughs

Economic value of impact = £1.4 billion

Source: Kavetsos (2009)