I\’m unconvinced of this growth and the Olympics story

The bad news is that, without a doubt this had much to do with the Olympics, as, maybe, do temporarily declining unemployment figures.

Now that\’s not bad per se: what that proves is that government spending can stimulate the economy without detrimental consequences. No, it\’s bad because the Olympics is over and there\’s not only nothing to replace it and there are massive further cuts in progress.

The contribution to growth coming from the spending on the Olympics. Wouldn\’t that all have been while they were building the various places? Not the having of the games but the preparing for them?

I don\’t hear anyone saying that tourism was up during the games (far from it in fact). So I really don\’t see where that growth, in this quarter just reporting, comes from.

Anyone?

23 thoughts on “I\’m unconvinced of this growth and the Olympics story”

  1. It’s a technical factor. The spending on tickets (and I believe TV rights) has to be allocated to a quarter, and convention is its the one in which the Games takes place.

    [It’s in fact the smaller of two one-off effects at 0.2% – the larger is simply a base effect from the Jubilee – that might be 0.5%).

  2. I thought that during the Olympics, because everyone was glued to their television, sales at the shops and in restaurants was supposed to have plummeted.

  3. I read an even sillier line by theShadow Treasury secretary in the Metro this morning: “The question is what the underlying growth rate of the economy is when we strip out the one-off Olympics and bank holiday effects.”

    Bank holidays reduce output you silly woman.

  4. James James,

    Bank holidays reduce output you silly woman.

    But I think (and I think Timmy was pointing this out) that government workers, being paid to sit at home and watch the boat flotilla count towards GDP as much as if they were clearing up parks, teaching kids or handing out 5-a-day advice.

  5. James James – it’s you who is being silly. The extra Bank Holiday was in Q2. So not having an extra Bank Holiday in Q3 raises the Q3 growth rate, which is quarter on quarter.

  6. So whilst the Olympics depressed the GDP because everyone stopped working to be glued to the telly, it has also increased the GDP when all the income from the Olympics (tickets + rights etc) is squeezed into one quarter. Way to go in terms of fudging the stats and make it sound like everything is honky dory. What happens when the GDP dips a little next quarter as it will inevitably happen. Is everyone going to be then saying we’re heading for a triple dip recession, only to be pulled up again late next year as the GDP rises naturally without these one off effects.

  7. It’d be odd to believe that Olympic ticket sales is not pure crowding out, but I’m not a Keynesian. i.e. if we hadn’t all given money to the government for Olympics tickets, we would have been able to spend it on something else.

  8. While many people watched the games, many others were not interested in every event. I was warned by many people that the Olympics would affect my sales. They were right. Considerable boost to sales numbers and total turnover for the games and a lesser boost for the paralympics. And I sell nothing to do with the games.
    Some other sellers I know of have also reported increased sales from the games. Maybe it was high street rather than internet sales affected?

  9. Britmouse,

    It’d be odd to believe that Olympic ticket sales is not pure crowding out, but I’m not a Keynesian. i.e. if we hadn’t all given money to the government for Olympics tickets, we would have been able to spend it on something else.

    We do get quite a large chunk of the TV rights (I think it’s either 40% or 60%, with the IOC getting the rest). That’s what has really boosted the figures more than the ticket sales.

    That said, I seem to recall it works out around £2bn back on the £11+bn project. So the boost is like enjoying the heat from a Chippendale table that you previously chopped up for firewood.

  10. And this quarter we should get a boost from Christmas sales. Possibly boosted by loans/credit cards and overdrafts.

  11. “James James – it’s you who is being silly. The extra Bank Holiday was in Q2. So not having an extra Bank Holiday in Q3 raises the Q3 growth rate, which is quarter on quarter.”

    You are quite right and I take it back.

  12. “But I think (and I think Timmy was pointing this out) that government workers, being paid to sit at home and watch the boat flotilla count towards GDP as much as if they were clearing up parks, teaching kids or handing out 5-a-day advice.”

    Ha ha!

  13. “We do get quite a large chunk of the TV rights”

    Yeah, but you persist with the the crude Keynesian assumptions, that in a counterfactual where the Olympics did not take place, the money and people it involved would simply sit idle.

  14. Wouldn’t some of the Olympic stuff have been in-quarter? Security, catering, manning the gates, all that sort of thing?

    But yes, probably not big.

  15. If I remember correctly there’s very disappointing sales of branded merchandise – which would also affect figures?

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