Olympics legacy: Did London 2012 provide a boom - or leave us bust?

We were told that London 2012 would boost business and revive the UK economy. Has it? James Ashton continues our week-long special investigation of the Olympic legacy

London calling The sun sets over our capital's gorgeous skyline - but beneath, the tension mounts as Brazil's Pedro Cunha and Ricardo Santos take on Tarjei Viken Skarlund and Martin Spinnangr of Norway, in the men's beach volleyball on Horse Guards Pa (PA)

Some 36 hours before Daniel Craig collected the Queen for their helicopter ride over London one Friday evening last July, a phalanx of dignitaries took a far lower-key trip to another London landmark. The polished limousines that discreetly rolled up to Grade 1-listed Lancaster House at the base of St James’s disgorged chief executives, central bankers and heads of state. They were in the capital to enjoy the spectacle of the start of the London Olympics. But first, on a bright summer’s morning with the national anthem wafting on the breeze, they were being encouraged to get down to business.

This gathering, the Government’s main investment pitch to the world, typified what was going on behind the scenes last summer while most eyes were focused on events in the pool and on the track. The Business Olympics, featuring a networking marathon and a 100m dash to the canapés, was designed to squeeze some lasting economic benefit from the greatest show on earth. One year on, how much has London, and Britain, profited?

Business leaders agree that the event was, if nothing else, a great advert for Britain. “It is often thought that we aren’t very good at running things but the precision and quality of presentation of the Games, the way it was managed with what people recognise as a challenged transport system, and the way that projected around the world, was fantastic,” said Andy Cosslett, who once ran InterContinental Hotels Group and is now in charge at gyms chain Fitness First.

Translating that mood into pounds and pence is harder. The country needs to reap more than £9bn – billed as the cost of staging the Games – to push the whole effort into the black. Pragmatically, totting up the gains barely 12 months on is too soon.

Sure, the value of booked-up hotel rooms, temporary employment and, conversely, deserted West End restaurants, has already been calculated. But the real boon, as seen by the agenda that morning at Lancaster House, was in the long-term impact that holding the Olympics could have on tourism and trade. David Cameron couldn’t have made that any clearer.

“My message today is very simple,” the Prime Minister told delegates. “Britain is back, open for business, and we are committed to supporting global growth with open trade between our nations.”

Ministers wanted to emphasise the traditional and the modern, which was why guests – including Alexandre Tombini, the governor of Brazil’s central bank, and GlaxoSmithKline drugs boss Sir Andrew Witty – were greeted in a room with a 200-year-old John Nash staircase and featuring two of Thomas Heatherwick’s extruded aluminium benches.

As WPP advertising chief Sir Martin Sorrell pointed out, Britain is harder to market to international investors than the emerging superpowers of China and Brazil. Everyone has an ingrained view of what our country and London can offer them, but they aren’t always right. Pitching its strengths that day was designed to boost trade.

Doubters said setting targets for the economic impact of the Olympics would be meaningless – but it didn’t stop the government from trying. The most many host cities can hope for is to avoid bankruptcy. Yet a hoped-for benefit of £13bn over four years was announced by Cameron in the run-up to the Games. It included £6bn from foreign direct investment, £5bn from extra sales and contract wins by British companies, with the balance from an increase in tourists.

Lord Green, the Trade and Investment minister, who is due to give a progress report, said: “We set ourselves an internal target of £5.3bn in the first year and I am confident we will meet it. That includes a £2.5bn boost in foreign investment over the past year, bringing more than 31,000 jobs.

“While, of course, the London 2012 ‘halo’ will fade over time, we are already winning significant new business overseas and there is a large pipeline of future business projects going forward which we are well placed to do well in.”

It wasn’t all immediately positive. For the tourist industry, there is evidence the Games depressed growth in visitor numbers last year, as non-sports fans stayed away. In a stagnant European market, only London and Paris are thriving. Hotel bosses assign very little importance to the Games reinforcing the capital’s attractions.

“I’m not sure that a market like London is really going to benefit longer term from the Olympics,” said Arne Sorenson, boss of Marriott International, whose brands include Ritz-Carlton and Renaissance. “It is such a compelling destination anyway – and it was before.”

But there are plenty of examples of businesses that have benefited. David Pegler, chief executive of ExCeL London, the exhibition centre that hosted seven Olympic events including boxing, fencing and weightlifting, reports a threefold increase in the number of large events it has been asked to pitch for.

“That is definitely the result of much greater interest in London, people almost rediscovering the city because of the Games and the fact they were an almost flawless event,” he said. “That is very tangible.”

Yet direct gains are hard to separate from the recovery that London’s economy has seen over the past year. Experts doubt it has had much impact on the resurgent commercial property and housing market, for example. All that Chinese and Abu Dhabi money would have flowed here anyway.

“Does it help London being showcased and planning a very positive event – and doing it very well?” asked Jeremy Helsby, chief executive of property group Savills. “It can only help the feel-good factor. But if we hadn’t had the Olympics would London property prices still be doing what they have been doing? Absolutely, yes. They are intangible benefits rather than tangible.”

Cheerleaders prefer to point to the work that was done to prepare London for the Games and turn a derelict strip of land into an extension of the capital.

The futuristic stadia greenlit by the Olympic Delivery Authority’s design chief, Alison Nimmo, who now runs the Crown Estate, helped to show off British engineering skills, which are in demand, particularly in Qatar, which is preparing to host the 2022 World Cup.

Business leaders involved in the Olympics such as Sir Charles Allen, the former ITV boss, estimate that the overhaul of Stratford in East London advanced 20 years of regeneration, making the Games a one-off excuse to do something large and lasting.

“Only the government could do something on that scale,” said Sir John Ritblat, the property veteran who is chairman of the advisory board of Delancey, which acquired the athletes’ village in partnership with Qatari investors. Now the site is known as East Village and 3,000 new homes are on offer with the promise of more to come.

It all adds up to a lingering feel-good factor, which the Government’s export body UKTI is doing its best to capitalise on abroad. The economy will benefit, but counting up all of that Olympic gold is far from a straightforward exercise.